Tax Lien States That Sell Tax Lien Certificates

A tax lien certificate sale is a process where a government entity sells a tax lien on a property to investors as a way to collect unpaid property taxes. Here's a breakdown of how it works:

• Unpaid Taxes: When a property owner fails to pay their property taxes, the local government places a lien on the property for the amount of the unpaid taxes plus interest and penalties.


• Public Auction: Instead of foreclosing on the property immediately, the government may sell the tax lien to investors at a public auction. The winning bidder pays the amount of the unpaid taxes, and in return, they receive a tax lien certificate.


• Interest and Penalties: The holder of the tax lien certificate is entitled to collect the amount of the unpaid taxes plus interest and penalties from the property owner. The interest rate and penalties are often set by state law and can be quite high, making this an attractive investment for some.


• Redemption Period: The property owner has a set period, known as the redemption period, to pay off the lien by reimbursing the investor the amount they paid for the lien plus interest and penalties. This period can vary by jurisdiction, typically ranging from a few months to a few years.


• Foreclosure Rights: If the property owner does not pay off the lien within the redemption period, the holder of the tax lien certificate may have the right to foreclose on the property and take ownership.


• Due Diligence: Investors need to conduct due diligence before purchasing a tax lien certificate. This includes researching the property, understanding local laws, and assessing the likelihood that the property owner will repay the lien..


• Investment Consideration: Tax lien certificates can be a lucrative investment due to the high interest rates and penalties. However, they also come with risks, such as the possibility of the property being in poor condition or the property owner never redeeming the lien, leading to a potentially costly foreclosure process.


• Local Variation: The specifics of tax lien certificate sales can vary widely depending on the jurisdiction, including the auction process, interest rates, redemption periods, and foreclosure procedures.

In summary, a tax lien certificate sale allows investors to purchase liens on properties with unpaid taxes, providing the government with the funds it needs while giving investors the potential to earn interest and, in some cases, acquire property at a low cost.

Below you will find a list of states which sell tax lien certificates. In addition, linked with each state are tax lien summaries including, the statute mandated penalty rates, redemption periods and other tax sale information for buying tax liens.

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