WHAT ARE TAX LIENS AND HOW DO THEY WORK?

They can place a tax lien on your property and either sell that lien to investors in a public auction or collect the interest themselves. If you have a property tax lien assessed, you are required to pay the cost of your taxes plus 5% to 50% in interest. You will be allowed a certain amount of time to settle the debt, or “redeem” the lien. Failure to do so will result in the foreclosure of your property and the lien holder can take full possession of your property. It is all mandated by government statute.

To have a reliable and predictable source of revenue, local governments sell unpaid property tax liens and tax deeds to private investors. The lien against a delinquent taxpayer’s property accrues interest of 5% to 50% each year until the taxes have been satisfied (the exact amount varies from state to state).

If the taxes and accrued interest are not paid within a specific period of time (set by the local government) the lien may be foreclosed and the property sold by the holder at full market price. Certificates are issued for each lien. The certificates are recorded in the local government property records and provide all the information regarding the details of the lien.

Tax lien certificates provide the address, legal description and current owner of the property, as well as the rate of interest and the amount of time the owner has before the property may be foreclosed on by the certificate holder (investor). Government tax liens are superior to all other liens attached to property, including first mortgages.