26 Of The Most Frequently Asked Questions About Tax Liens

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Ted Thomas

Anyone who has the cash to pay the auctioneer.

No, you are only paying that property owner’s delinquent taxes. You are not foreclosing on them.

Possibly, although it’s rare for a property owner to forfeit their real estate. In Arizona, for example, 99% of all property owners pay (redeem) the taxes due to the county. The county in turn pays you interest plus a high rate of return. Nationwide, 95% of all tax lien certificates sold are paid (redeemed) by the property owner.

  • People die and no one pays the tax, though heirs may pay the taxes later.
  • People run out of money – they become unemployed and have money problems.
  • Some people won’t part with the money until the last minute. They are making more by investing elsewhere.

Not exactly. They send multiple notices via mail and put announcements in the public records and the newspapers. That’s all they are required to do.

The county will forward tax notices to the last-known address. Additionally they will advertise the tax sale. Often, heirs or family members step forward to pay the taxes.

There’s no restriction. you can bid and purchase as many as your finances will allow.

You will give your money to a government agency – there are no brokers or intermediaries to pay.

The property owner pays you when they pay their delinquent taxes. The government agency (the county or municipality that collected the money from you) will contact you and ask you to return your tax lien certificate. Upon receipt they will send you a government check.

No! You only do business with the government agency.

Statistically there is less than a 5% chance that you’ll ever go through the foreclosure process. An attorney or government employee would do this service for a small fee as it is all controlled by the statutes of the state involved.

When the county or municipality collects from the property owner, they will notify you. Upon receipt of your certificate they will pay you.

First, you are not buying real estate. You are purchasing a lien on the real estate. Should you ultimately foreclose and get the property, then you own real estate.

Here is how the process works. The county will publish a tax lien sale in the newspaper and public records. Buyer/bidders should research the public records (plot maps, assessment parcel and subdivision maps). The buyer/bidder should also purchase local maps and drive by the subject properties. the drive-by inspection would provide additional appraisal data. Title companies and appraiser, and real estate agents will provide more in-depth information. I explain exactly how to do all this in my training webinars and courses. Sign up above for our next Free Webinar training.

Yes, you can put it in your safety deposit box or other place for safekeeping.

Yes, you can assign or transfer the certificates to anyone you want.

No. The properties could be vacant land or improved property. Often large commercial properties are available in the tax lien sale.

Improved property has the advantage of quick re-sale in many cases. Additionally, improved property will often have mortgage liens. Mortgage holders rarely let properties go to tax sale. Properties with mortgage liens almost always assure you of re-payment of your investment.

That’s possible – but highly unlikely. Specialists find that certificate holders get the property in only 1% to 5% of all tax lien sales. We cover this process in detail in our training course.

No, each state and county uses its own rules. The state legislatures write the statutes. However, they are subject to local (county and municipal) interpretation. Tax lien buyers should research each county before purchasing their tax lien certificate, and should become aware of the local rules.

You, the previous year’s certificate holder, can buy the subsequent year if the property owner does not. This is like buying another safe high yielding C.D.

You aren’t required to pay more than one year’s taxes. However, it would probably be wise to note when the next payment is due and pay those taxes also. You’ll get your money back when the certificate is redeemed, plus an exceptional rate of return. If you can’t pay the subsequent tax lien, the county will issue a new certificate that they will sell at auction.

No! That’s why you should buy more than one lien certificate. Different certificates will pay off at different times.

In some counties, leftover or unbid certificates will be available before the auction – sale.

It’s possible to lose money in any investment anywhere and any time. All investments have some risk, even certificates of deposit. However, as a rule, tax lien certificates are considered very safe investments.