What is a Tax Lien sale vs a Tax Auction? NO TAX LIEN SALES IN HAWAII!

Recently I kept seeing a Facebook ad wanting me to sign up to learn about how to buy tax liens in Hawaii.  🙄  Fortunately I know that Hawaii County doesn't do tax lien sales, they do tax auctions.  

In many counties on the mainland, instead of letting a large tax balance build up over several years and then doing a foreclosure, those county tax offices auction off tax liens.  Typically you pay ONLY the amount of taxes owed, and the bidding is for the interest rate you will receive if the owner pays it off.  It starts at 18% and you bid down to zero.  The bidder who bids to pay off that year's taxes in full at the lowest interest rate wins the lien.  The following year, that same bidder is given the opportunity to again pay off the taxes for a tax lien.  Once there are three years worth of liens, the bidder may take the property to court for tax foreclosure.  This system is much more fair to the owner because they get three years to pay off their tax liens, and they are only required to pay the taxes plus the interest rate the bidder bid.  It's also much nicer for the bidder because although they have to wait through a three year process, they have the chance to obtain a property for ONLY the past due taxes, no bidding up.  

Contrary to this commonly used tax lien system, Hawaii County does a tax foreclosure.  They let the amount of taxes pile up for three or more years, and then take the property to auction where the amount gets bid up, sometimes to $100k or more over the tax liability.  This is very unfair to the prior owner who then has to come up with all of that extra money, at 12% interest, if they want to redeem their property.  It is also not nearly as lucrative for the bidder since they are getting the properties at close to market value, not nearly the bargain they deserve since they are buying a property that now has a tax auction in the chain of title.  The one big benefit is that the foreclosure part is already done.  Unlike the tax lien system where the bidder is responsible for finalizing the foreclosure, in Hawaii the county does that step.  

So, don't get duped and sign up for a class on how to buy Hawaii tax liens.  We only do direct tax foreclosures here!  

Tax Lien System	Tax Foreclosure System
Bidder must buy three consecutive liens, then bidder forecloses.	County accumulates a tax owed balance for three or more years, then county forecloses.
County get their taxes paid in full every year.	County has huge amounts of taxes due while they process the foreclosures.
Bidding is on the interest rate, starts at 18% (depending on county) and bids down.	Bidding is on the purchase price.  Starts at taxes owed plus legal fees and goes up.
Owner still owns – can pay off tax liens through the county and the county pays back the bidder.  Much easier to pay off because it is ONLY taxes owed plus interest.	Bidder owns immediately.  Prior owner has one year to redeem the property directly from the bidder by paying the winning bid amount + 12% + all escrow fees.  Difficult to pay off because it is the market price bid at auction plus interest and escrow fees.  Typically a lot more than what was owed in taxes.  County does not assist in the redemption process.
Bidder must foreclose after three years	County forecloses as part of the process
Usually online bidding	In person bidding

County of Hawaii Tax Auction June 2023

It's that time of year again!  The Hawaii County Tax auction has been scheduled for June 8th at the Afook-Chinen Civic Auditorium starting at 9am.  

Here is a link to the county site with the auction list and the folder full of litigation guarantees:  https://records.hawaiicounty.gov/weblink/Browse.aspx?dbid=1&startid=55713&cr=1

Here are the links to understanding tax auctions: 

Hawaii County Tax Auction FAQ

How to work the tax list to prepare for auction

And finally, a recap of January's auction so you can see how it might go: 

January 2023 tax auction recap

January's auction was held at the Sangha hall which was a great location inside, but the parking situation was dismal.  This year it looks like it will be back at the Afook-Chinen Civic Auditorium which had tons of parking but it was very difficult to hear what was happening.  I miss the days when the attendance was low enough that the auction could be held at Aunt Sally's.  

The publication of the list was also different this year, so maybe attendance will be down.  Typically the list is published along with bank foreclosures and association foreclosures in the online classified section of the West Hawaii Today and the Hawaii Tribune Herald.  This year, for some reason, it was only published in their print or online print-reader version, so if you didn't have a paid subscription to the paper, you wouldn't have seen the notice. I only saw it because I routinely check the county site for it starting in December and May.  

Subscribe to receive these notices via email. 

11-2828 Lehua Street, Kurtistown, Hawaii 96760 - Foreclosure Notice

 From Hawaii Tribune Herald 5/17/23:

Notice #: 0001415174-01
Foreclosures

---

NOTICE OF FORECLOSURE SALE Pursuant to the Findings of Fact, Conclusions of Law and Order Granting Plaintiff’s Motion for Summary Judgment Against All Defendants and for Interlocutory Decree of Foreclosure; Exhibit “A” filed on June 16, 2021, in New Residential Mortgage LLC v. Marshall D. Chinen, as Successor Personal Representative of the Estate of Frederick Turner King, et al., Civil No. 3CC151000247, Circuit Court of the Third Circuit, State of Hawaii, the undersigned Commissioner will sell the following described property at public foreclosure sale at the date and time set forth below: PROPERTY: All of that certain parcel of land situate at Keaau, District of Puna, Island and County of Hawaii, State of Hawaii, being LOT 6937, as shown on Map 51, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1053 (amended) of W. H. Shipman, Limited, and containing an area of 2.00 acres, more or less. Bearing TMK (3) 1-1-042-265. STREET ADDRESS: 11-2828 Lehua Street, Kurtistown, Hawaii 96760 III. Land Use Designation: County Zoning: A-3A. IV. Improvements: Built in 2002. One (1) bedroom, One (1) bath dwelling containing 474 square feet, as per County of Hawaii records. TERMS: The property will be sold “as is” at public auction with NO UPSET PRICE, and with ten percent (10%) of the highest bid payable in cash, certified or cashier’s check at the fall of the hammer; balance is payable upon delivery of documents transferring title; purchaser shall pay all costs of escrow, conveyancing, recordation and conveyance tax, and shall be responsible for securing possession; SALE SHALL NOT BE FINAL UNTIL APPROVED AND CONFIRMED BY THE COURT. The purchaser shall pay closing costs, including but not limited to costs of escrow fees, title insurance premiums, conveyance document preparation fees, accrued and unpaid real property, conveyance tax, accrued and unpaid ground rent payments, recordation and costs of securing possession after closing. The ability of the purchaser to secure title insurance shall not be a condition of closing. NO OPEN HOUSES WILL BE HELD. SALE DATE: The lot will be auctioned for sale on Thursday, June 15, 2023, beginning at 12:00 noon, at the front entrance of Hale Kaulike (Hilo Judiciary Complex), 777 Kilauea Avenue, Hilo, Hawaii. For legal description of property to be conveyed and for further details about the sale, contact JEREL I. YAMAMOTO, Commissioner, 187 Kapiolani Street, Hilo, Hawaii 96720 (phone (808) 961-0641); email: jerel@noyhawaii.com. ALL INFORMATION IN THIS NOTICE SHOULD BE INDEPENDENTLY VERIFIED BY THE PURCHASER BEFORE BIDDING. JEREL I. YAMAMOTO Commissioner (HTH1415174 5/17, 5/24, 5/31/23)

See all open houses and auctions on the calendar.

Subscribe to receive these notices via email.