Tax Overages: Pile o’ Cash Left on the Table?
Hey, how’s it going?
It’s a sunny afternoon as I write this, and I’ve just enjoyed an ice-cold Coke while checking out information for this review.
I hope you’ve got your feet up and your own cold one (Coke or other) close by. Relax and enjoy!
First lemme ask you a question. What brings you here?
I mean, other than the obvious—the review on Joe Kaiser excess funding and the 4-1-1 on the foreclosure rescue business.
Are you looking for a job adjustment? An escape from the guy in the suit? An office with a new view?
Or is it a cash situation? Like, your accounts are sucking wind and you’re looking for a side gig to create some more bank?
If that’s you, I get it. That was me a while back, and I got into real estate investing as my straight shot to the green stuff. As I was rockin’ and rollin’, however, the economy also rocked and rolled—all the way to the bottom—and so did all of my investments. My properties went bye-bye and that was the end of that. Bam.
As I was lying there on my back wondering what the heck to do next, a guy with some mad internet skills tapped me on the shoulder (sort of) and said, Yo, Paul, why don’t you check out digital property management?
I did, and next thing I know I’m knee deep in internet marketing. Not a bad way to go, but you have to know make sure that your mindset is right before you proceed.
Now, if you’d asked me if I had a winning mindset, I would have told you emphatically, “YES.”
But… I still had a lot to learn. My recommendation to anyone who wants to start growing their own business to satisfy their entrepreneurial itch is to take every chance you can to humble yourself and study you.
Get aware of your strengths, weaknesses, habits, behaviors and beliefs. Don’t neglect that stuff.
OK, now to the review. . . . and God Speed to ya!
Joe Kaiser, Tax Sale Overage Recovery and a word about Lists
If you Google Joe Kaiser real estate or Joe Kaiser real estate investor, you’ll come up with a pretty mixed list of entries. Hype (“a man who is the most innovative real estate investing educator around today”) to, um, non-hype (State v Kaiser case summary).
Joe Kaiser is a guy who got into real estate investing back in the mid 1980’s.
Somewhere along the way he got into the foreclosure rescue business, also called excess funding or tax foreclosure overages.
He has been the subject of lawsuits and court actions and has been found guilty in a number of areas. However, he still sells his materials and training.
Because of the court actions against him, I’m not that inclined to do a full-on review of Joe Kaiser. Legal action against real estate investors for the way they have gone about doing deals leaves me suspect about their post-litigation trustworthiness, even though Kaiser has his rebuttals and reasons for why he is innocent. (One being that tax sale overages escheat—or revert to—counties; therefore a state will go after someone like Kaiser who is taking away from counties’ revenue.)
So I will jump in and give you an overview of what I found out about Joe Kaiser and you can conclude what you want to about the information.
Kaiser pitches his unclaimed funds strategy in his course called Joe Kaiser Excess Funding, available for $499 at excessfunding.com.
The unclaimed funds that Kaiser focuses on are tax foreclosure overages. These are monies owed people who have lost their homes to tax foreclosure (they haven’t paid their property taxes, so the house goes into foreclosure).
The house is sold, the taxes and sale fees paid off, and, if there was equity in the home, the balance is due whomever owned the home at the time of the tax delinquency certificate. However, home owners who can’t pay taxes often don’t have the money to hire an attorney to claim the foreclosure overage money, and this is where Kaiser enters the scene.
Kaiser comes along and gives them, for example, $2500, and they can use that to get into another home. They avoid being evicted and living in their car or having their belongings ejected onto the front lawn. Kaiser sees himself as an excess funder that allows his clients to “move forward with dignity.”
He describes the strategy as beginning with an advance to the clients of up to 10% of the overage. Kaiser hires an attorney to file the overage claim and recover the funds on the client’s behalf. They supposedly end up with a check for their share of the overages funds.
Excess funders like Kaiser make money by getting the client to agree to assign them the overages claim. When a claim is recovered, Kaiser supposedly splits the claim, with the client getting the greatest percentage. That’s the barebones of the mortgage foreclosure overages business.
If the client agrees to a 70/30 split and the overage is $25,000, when the surplus funds check arrives, Kaiser gets $7500 (30%) and the client gets $15000 (60% that they’re owed after a 10% advance).
In that scenario, the client has avoided eviction, has funds for a new place to live, and gets $17,500 of overages.
Kaiser gets $7500 after having invested $2500.
Kaiser doesn’t use his own money for the deals. He pitches the deal to an investor who gives the advance on the overages check.
On Kaiser’s landing page at excessfunding.com, he calls excess funding a brand-new unclaimed funds strategy. (In a thread on BiggerPockets.com in 2014, Wayne, a real estate professional from West Palm Beach, FL, says, tax overages is “an old, old game fully saturated. In Florida, you’re limited to a 12% fee because of all the abuses that have occurred over the last 20 years. Completely saturated, it only sounds “innovative” to new people who haven’t heard of it before.)
Tax Sale Overages Business Gone Bad: Take This as Training
ENTER THE COURT
On March 21, 2011, the case of State v. Kaiser LLC (Joseph Kaiser and his wife, Heidi) was decided before the court of Appeals of Washington, Division 1.
The case summary says that Joseph Kaiser preyed on property owners who faced a tax foreclosure by falsely offering to help save the property from foreclosure if the owner agreed to give Kaiser an ownership interest in the property.
The Attorney General filed an enforcement action against Kaiser, alleging violation of the Consumer Protection Act (CPA). Kaiser appealed the decision.
The summary states that between 1998 and 2008, Joe Kaiser and his partners engaged in approximately 400 transactions with property owners facing tax foreclosure. During these years Kaiser did business as Fiscal Dynamics, Inc., Cumulative LLC, Dove Realty Inc., Northwest Assets Inc., G. Hoba Investments LLC, Bobo Buys Real Estate LLC, and Pre Flop LLC.
Kaiser and his partners, according to the document, sent letters and postcards to property owners who had received a certificate of tax delinquency. He offered to act on the owner’s behalf to help them keep their property or home.
The summary explains the tax overage strategy. When a property owner doesn’t pay taxes, they receive a certificate of delinquency from the county. If the property owner is not able to pay the taxes or doesn’t pay the taxes, the home goes into a tax foreclosure sale, initiated by the county. (You’re welcome for the mini course.)
When the delinquent taxes and fees are deducted from the sale, the remaining amount (the excess proceeds from the foreclosure sale) is paid to the record owner at the time the certificate of delinquency was issued.
In this kind of situation, according to the summary, Kaiser would offer to help the property owner avoid foreclosure. Kaiser would typically pay only $100-$500 and convince them to sign an agreement that gave him the title to their property.
As part of the deal, the property owner would sign several documents, including a purchase and sale agreement, a quick claim deed, a seller acknowledgment, and a power of attorney. According to the summary, after Kaiser got the title to the property, instead of taking steps to avoid the foreclosure, Kaiser allowed the property to go in a tax sale, and either kept the entire overage amount or a percentage of the overage amount.
Apparently several lawsuits challenged Kaiser’s right to receive the overage amount after the tax sale. In response to the lawsuits, Kaiser updated and added additional forms as a strategy to remove contractual defenses and to keep the courts from blocking his transactions.
Kaiser was not the record owner of the properties when the county would issue the certificates of delinquency, so he would not be the one entitled to receive the tax overage check. However, he found a way around this by having the owner sign a notarized form allowing him to obtain the power of attorney. Through this, Kaiser was able to receive the overages funds directly.
The summary records several specific examples of deals that Kaiser carried out in which he walked away with substantial amounts of overage funds.
On March 14, 2007, the Attorney General filed a complaint against Kaiser and his partners. The complaint alleged that he and his partners committed unfair and deceptive acts and practices in violation of the CPA by falsely offering to help property owners avoid a tax foreclosure sale and keep their property or home if they entered into an agreement with him.
On May 11 the defendents, minus Kaiser, agreed to enter into an injunction that would keep them from contacting or representing property owners who were subject to a pending tax foreclosure. They also agreed to pay $290,00 in restitution, $30,000 in costs and attorneys’ fees, and $50,000 in civil penalties, and to provide the Attorney General with a list of property owners eligible to receive the restitution. (Kaiser did not agree to enter into this consent decree.)
After the consent decree (that he didn’t sign), Kaiser formed Unclaimed Funds, Inc. The back-and-forth action continues in the case summary.
Rain City Guide is a resource for real estate information in the Seattle area. It is a blog that provides information by real estate professionals.
In 2009, Jillayne Schlicke posted a blog article on Joe Kaiser titled “Foreclosure Rescue Scammer or AG Victim: You Be the Judge.” This blog basically covers the same information that was in the court decision, but written in a way that’s more accessible to the average reader.
The comment thread following Schlicke’s blog has several responses from Kaiser, posted almost two years later, explaining his actions and how he was not a scammer and instead was an investor who created extraordinary solutions that people wanted, needed, and loved.
I couldn’t find much in the way of current information on Kaiser, except for his landing page that makes it sound like he’s alive and well, is prospering in his favorite Unclaimed Funds strategy (Excess Funding), and would be very happy to send you his course for $497.
So there you go: Joe Kaiser and tax overages aka unclaimed funds.
It’s not my intent to bash anyone in my reviews but rather to lay out what I’ve found. The tax overages strategy sounds like a legitimate way to make cash, and it also sounds like a strategy that would be easy to abuse. If you research tax overages lists and decide to dish out the $497 for Kaiser’s course, I just say be smart about it and go into it with your eyes open. And don’t abuse it. That just ruins it for real estate investors everywhere. (Now stepping down off my momentary small soapbox.)
Over and out!
Good luck out there!
Paul
