What Is a Tax Lien Certificate Auction?

If you want to make big profits working part time, then you need to know about tax lien certificate auctions. Imagine making 10, 15, 18, 20 and even a 50 percent return on your investment in just two years or less.

It can be done. People do it every day. You can do it too. You just have to know the rules and do your homework.

tax lien certificate auction


A tax lien certificate auction is a public auction typically conducted by a county tax collector or treasurer. This is one type of “tax defaulted property auction.”

When a property owner does not pay his property taxes, the county puts a lien on the property. If the taxes continue to go unpaid, the county sells this lien at a public auction. This is your opportunity to invest and make big profits.

Tax defaulted property auctions come in two types

Tax Lien Certificate Auction

In a tax lien certificate auction, you are buying the right to collect the past due property taxes and interest. Interest rates in tax defaulted property auctions go as high as 36 percent annually in some cases in Illinois.

Tax Deed Auction

In a tax deed auction, you are buying the property. You make money by selling the property, renting the property or finding some other use for it. I wrote about in the article .


A tax lien, for this discussion, is a lien against a property filed by a local government (county, town, city) tax collector. It is a legal attempt to collect past due property taxes.

Nolo is a respected website that explains legal issues in plain English. In the article Types of property liens, Attorney Margaret Reiter says, “A lien is a notice attached to your property informing everyone that you owe the creditor money.”

The lien is recorded in the public records. A lien is often called a “fault” on the property title. When someone buys real estate, a title search looks for these faults in the deed. If the property is sold, the lien has to be paid off first.

The property lien is sold at a public auction. The tax lien certificate auction is advertised in the local newspaper. More and more, the auctions are also posted online.

I wrote explains a tax lien in detail.

You can get a complete list of states that hold tax deed auctions and tax lien certificate auctions on my website, Members.TedThomas.com. I have videos and other articles that tell you everything you need to know to be successful and make big profits.


It is legal for tax collectors to sell tax lien certificates to collect past due taxes. Every state has some procedure to conduct a tax defaulted property auction. Every county has rules, based on state law, conduct these auctions.

The most recent tax defaulted property auction case that went before the Supreme Court is Jones v. Flowers. In writing for the majority, Chief Justice John Roberts says several times that it is legal for the government to sell property to collect past due property taxes.

The first time he wrote, “We granted certiorari to determine whether, when notice of a tax sale is mailed to the owner and returned undelivered, the government must take additional reasonable steps to provide notice before taking the owner’s property.”

Certiorari means a higher court reviews a decision of a lower court. In this case, the US Supreme Court reviewed a decision by the Arkansas State Supreme Court. He talks about certiorari and government selling property to collect past due taxes one more time.

A bit later in the decision he wrote, “Due process requires the government to do something more before real property may be sold in a tax sale.” Due process means the government has to tell the property owner about the sale and give the property owner time to respond and try to stop the sale. Chief Justice Roberts says the auction is legal.


Tax liens are safe because the lien is guaranteed by the property.

The Nolo article about tax liens says, “Usually, a property tax lien takes priority over all other mortgages or liens on the property, even if the property tax lien was placed on the property later.” In other words, the mortgage is set aside.

It does not matter how much the property owner owes the bank. If you buy a tax lien at defaulted property auction, the mortgage is inferior to your tax lien and you will get paid before the bank. The bank cannot collect the mortgage from you.

The tax lien is also guaranteed by the property. About 95 percent of tax liens are redeemed by the property owner. Redeemed means the property owner pays you. He must pay:

• The amount of taxes you paid.

• Any fees, penalty and interest the tax collector added to the bill.

• All the interest you are allowed to collect under that state’s law.

Florida sets the price of the tax lien certificate before the auction begins. The interest rate starts at 18 percent and bidders lower (bid down) the interest rate instead of raising the bid price. The winning bidder is the one, who bids the lowest interest rate.

The Miami Herald, South Florida’s largest newspaper, states the average interest collected in the Broward County and Dade County tax lien certificate auctions is about 10 percent.


To buy a tax lien certificate at an auction you have to know the auction rules. Every state has laws that set the basic rules for the tax lien certificate auction. Every county has additional rules. A good example is Ohio. State law requires a $500 deposit to participate in a tax lien certificate auction. After that, each county can set its own rules.

Lawrence County, OH, requires be paid within five business days of the sale.

Stark County, OH, is different. “A deposit of 10% of the Winning bid, but not less than $500.00 is due the Treasurer of Stark County, no later than Noon on the Day of Sale. The remaining balance is due in 30 Calendar days from the date the final entry confirming the sale is received by the Clerk of Courts.”

You can get a complete list of tax lien certificate auction rules from the county where you want to invest. To start, decide which state you want to invest in. Then decide which county you want to invest in. Look up the county tax office with Google to get contact information.


You can invest anywhere in the United States. You just have to do your homework. That includes knowing the auction rules.

You need to check out the property as thoroughly as you can. I recommend new investors try to attend a tax defaulted property auction close to where they live. That way they can get a good look at the auction process. They can also personally investigate a home they may be interested in.

When you are ready to invest in other states, then you will have to check out the property in other ways. You need to know if the property is worth your investment. The tax auction listing is going to give you the address, the owner and how much taxes must be paid. It won’t give you the condition of the property or how much the property is worth.

Zillow.com is an online real estate guide. You can see what the property is worth on this site. My website, Members.TedThomas.com, has two videos that explain how to use Zillow for property examination.

You can also use street view programs like the one at Google Maps to get a look at the property from both aerial and street level.

Investing in tax lien certificate auctions can deliver big profits as long as you follow the rules and do your homework. Let me help. My website, Members.TedThomas.com, tells you everything you know to be successful. Articles and videos have interviews with experts. The experts also answer the most common questions people have.

As Chief Justice John Roberts wrote, “If the taxes are not paid, the government can have your property sold to pay the property taxes.” Big profits await for those who know how to invest in these auctions.

If you want to learn more about tax liens and tax deeds, go to TedThomas.com/safehaven, and take advantage of this free course, 2 streaming videos and a PDF packed full of info

Ted Thomas is a Florida-based author and publisher who specializes in tax defaulted properties. Visitors to his website will find 4 must see FREE instructional videos. No credit card required.

The video lessons will give you everything you ever wanted to learn about government tax defaulted real estate which is sold at public auctions for starting bid, back taxes for 10 cents to 20 cents on the dollar. You’ll also learn the secrets of tax lien certificates which pay guaranteed returns of 16%, 18%, up to 36%.

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Ted Thomas

Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.

The Ted Thomas Difference:

  • Ted is recognized as America’s Tax Lien Certificate & Tax Deed Authority and has been helping people with investing in tax defaulted properties for over 30 years.
  • Ted has built a team of certified coaches that have 70 combined years of auction experience and are available to his students by phone to guide and mentor you to avoid getting overwhelmed or worse, losing money
  • Ted has ironclad PROOF that what he is teaching you does work. With hundreds of successful students providing testimonials and a 4.9 Google rating which is unheard of in this industry.
  • Ted and his staff don’t hide behind a website; they can be reached during office hours at 321-449-9940.

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