Ohad Bukai is a tax lien investor. Working from a modest residential neighborhood in the Bronx, New York, he has amassed a portfolio of liens against properties across Montana and in other states — including multiple land parcels in Jefferson County.
In some ways, he is an unlikely investor: His company, Jericho Holdings LLC, is just him — there is no deep-pocketed corporation. He has never actually been to Montana, though he says he’s familiar with the state from the video game “Far Cry 5.”
But if things go the right way, given years of work and patience, Bukai could become a significant real estate owner here.
Welcome to tax deed season, a low-profile annual rite anchored in delinquent property taxes. Toward the back of this issue, you will find a raft of legal notices that threaten, “If you do not respond to this notice, you will lose your property,” language that is required by state law and that means what it says.
But it’s not as simple as that. The notices are part of a regulated, complex and burdensome dance between property owners, investors and counties. The primary objective is to ensure the flow of property tax revenue to local governments, while — up to a point — protecting the rights of land and building owners.
It requires a significant amount of administration, for both investors and counties. But “there is a benefit to it,” said Jefferson County Treasurer Terry Kunz. “Treasurers want to do the right thing, and we do everything we can to prevent people from losing their homes. But the win is that the taxes get paid.”
Here’s how it works. Each August, the treasurer’s office attaches tax liens — basically, a claim against the asset — to properties for which taxes from the previous tax year have not been paid. It makes a list of the liens available to anyone who asks. Potential investors can identify available properties that meet their criteria; at that point they must notify the owners that a lien assignment is pending.
If the taxes are not paid within two weeks of that notification, the county assigns the tax liens to investors on a first-come, first-served basis. Investors pay the county the taxes owed plus administrative costs. They continue to pay taxes associated with the property in subsequent years, unless the owner does and redeems the property.
If the property owner has not paid the delinquent taxes, with any associated interest, penalties and costs, by May of the third year following the assignment — right now, for liens assigned in 2021 — the investor enters into the tax deed process. The investor must send certified letters to anyone with a conceivable interest in the property. If there’s a residence on the land, the county makes sure that no one is living there.
For example, one of the tax liens held by Bukai, the New York investor, is on four old mining claims on South Fork Quartz Creek, about seven miles west of Jefferson City, currently owned by Mascot Silver-Lead Mines, a corporation based in Kellogg, Idaho.
Mascot (which is now registered in Idaho as Mascot Mines Inc., and appears to have no current revenue) has not paid $64.24 in taxes since 2020; it also owes a $1.31 penalty, $4.31 in interest and $206.57 in administrative costs. (Mascot officials couldn’t be reached for comment.)
If those taxes are still unpaid by August 3, the county will issue a tax deed to Bukai. It’s more complicated in cases where a residential home is involved; in those situations, according to Kunz, the county must auction the property for at least half its assessed value.
There are two sorts of investors who play this game. One is interested in a flow of income: owners who redeem their properties by forking over back taxes must also pay 10% in interest — a healthy return, relative to other fixed-income investments.
The second type is seeking the underlying property. In most cases, Kunz says, this is undeveloped land, because the legal process associated with buildings is so cumbersome. An investor who acquires the tax deed to a property can then resell the land or develop it themselves.
In either case, it’s not an investment for everyone. There appear to be few institutional investors in the tax lien market, probably a function of the three-year waiting period and the stream of administrative minutiae.
“You need to have patience in order to make money at it,” says Bukai, the New York investor. “It’s a lot of work and a lot of time. For an investor, the only way is to stay at it.”
