2 Actions You Must Take in Order to Collect on A Property Tax Lien on Time

When you hear most  property tax lien investors talk about investing in property tax liens or property tax deeds, you usually mainly hear phrases like “pennies on the dollar” and “guaranteed money.”

Now, while it is true that investing in the right property tax liens will place you in a position to acquire valuable real estate for pennies on the dollar (in many cases) and that when conducted correctly a property tax lien investment does come with a guaranteed payoff of sorts, I still cringe when I hear this type of terminology. Why? Because it is very misleading to investors who are not familiar with the tax lien investing process.

Now, when I call these boasting folks out for their oversimplification of the process of property tax lien investing, I usually get called out in response. “Why are you trying to scare people off?” I get asked. “You just want all the deals for yourself!”

Well, for starters, it is demonstrably untrue that I “want all the deals for myself.” After all, what we do at PIP Group is invest not only on our own behalf, but on behalf of other real estate investors! It is my entire mission to help others invest in tax liens and tax deeds. It is just also my entire mission to make sure that it gets done right. If you just assume that property tax lien investing is so easy and guaranteed that you can’t mess up, all that will happen is that you end up out of money, with delayed returns, or even in the hole because you didn’t understand the process or the protocol for the transaction.

Here is an example of what I mean:

One of our investors came to us because he was trying to figure out why he had not gotten notice from the county in which he had purchased a tax lien that he could take over the property. After all, he had bid at auction, won the right to collect on the tax lien, and then waited the requisite 18 months (in this case) to get his check in the mail from the homeowner if they wanted to pay off the debt. No “mailbox money” ever arrived, so he assumed he would probably receive the title to the property or something from the county instead. He continued to wait, and he got…NOTHING. He ended up on our website looking for answers to the mystery, and I was appalled at his situation. He had neglected numerous important facets in the transaction, but there were two very basic things he needed to do that put him at risk for losing out on the investment completely.

He failed to send the property owner any notice

In most cases, a lien owner must notify the property owner, in writing, that they have purchased the lien on the home.

Near the end of the redemption period on the lien, they must send a second notification. Both pieces of correspondence must have certain information in the letter. If you fail to do this, then the lien may expire and you will be left with the warm and fuzzy feeling of having paid off someone else’s property taxes out of the pure goodness of your heart. Even if this does not happen, failing to handle the process correctly and then move to foreclose if the lien remains unpaid can result in other creditors superseding you in line for the property and you may find yourself unable to obtain the title.

Fortunately for my investor, in addition to failing to notify the property owner of his purchase, he had his dates wrong. He was very lucky because he still had time to meet the requirements in that particular area and, ultimately, was able to acquire the property. However, it was very, very lucky. In most cases, he might have found us too late. Those two crucial pieces of correspondence could have cost him everything.

Recent posts:

Can the Government Force Property Tax Lien Investors to Pay for Forced Property Maintenance?

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About the Author

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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