Mon. Jul 22nd, 2024

What are Tax Liens, and How do they Work?

A tax lien is a claim that a government entity makes against a property to secure payment of taxes. Tax liens can be placed on real and personal property and are usually enforced by auctioning off the property to the highest bidder. Sometimes, the government may allow the taxpayer to repay the taxes owed and keep the property. However, if the taxes are not paid, the government will eventually foreclose on the property and sell it at auction. Tax liens can be an effective way for the government to collect taxes, but they can also be a source of revenue for investors willing to take on the risk of buying properties at auction.

The Benefits of Buying Properties with Tax Liens

Most people are familiar with a tax lien but may not know the potential benefits of buying a property with a tax lien attached. For starters, liens are public records that are relatively easy to find. You can search for properties with liens using online databases or by contacting your local tax assessor’s office. Once you’ve found a few possibilities, you can evaluate each one based on its location, condition, and other factors. You can often purchase the property for significantly less than its market value. And since the lien must be paid off before the property can be sold, you can be confident that you will eventually receive your investment back, plus interest. With careful research and a little luck, buying a property with a tax lien can be a great way to get a good deal on real estate.

What to Watch out for When Buying Properties with Tax Liens

When investing in properties with tax liens, there are a few things to watch out for. The first is the type of lien. There are two main types of tax liens: voluntary and involuntary. The owner places voluntary liens on a property to pay off a debt, while the government sets involuntary liens. The second thing to watch out for is the amount of the lien. The size of the lien will determine how much you will have to pay to redeem the property. Finally, you will also want to research the property itself. Make sure you know what you’re getting yourself into before investing in a tax lien property. You can invest wisely in a tax lien property with some research and caution.

The Closing Process for Purchasing a Property with a Tax Lien

When an investor decides to invest in tax liens, they are essentially lending money to the government. The government then places a lien on the property of the person who owes the taxes. The investor can purchase the property through a tax deed sale if the tax debt is not paid. There are a few things to remember when closing on a property with a tax lien:

  1. Understanding the lien and any associated fees is vital.
  2. The investor will need to determine whether they want to pay off the entire lien or just a portion.
  3. It is essential to be aware of any potential obstacles that could delay or prevent the sale.

However, with careful planning and due diligence, closing on a property with a tax lien can be a rewarding experience for any investor.

FAQs about Buying Properties with Tax Liens

Buying a property with a tax lien can be a great way to get a good deal on real estate. However, it’s essential to understand what you’re getting into before you make an offer. Here are some frequently asked questions about buying properties with tax liens:

What is a Junior Lien? 

A junior lien is a claim against a property subordinate to another suit. In other words, if the property is sold, the proceeds from the sale will first go to satisfying the senior claim, and any remaining funds will then go to fulfilling the junior claim.

How do I Buy Houses for Back Taxes? 

When property owners fail to pay their property taxes, the government can place a lien on the property. If the taxes remain unpaid, the government may eventually auction off the property to recoup the owed taxes. You can find information about upcoming tax sales online or through your local county clerk’s office.

Where Can I Buy Tax Lien Certificates? 

Tax lien certificates are generally available for purchase through your local county treasurer’s office, and you can also sometimes find them for sale online.

Buying a property with a tax lien can be a great way to get a good deal on real estate. However, it’s essential to understand what you’re getting into before you make an offer. Buying properties with tax liens can be complicated, so research before making any offers.


That’s a quick overview of tax liens – what they are, how they work, and the benefits of buying the property with them. If you want to learn more or have any questions, please don’t hesitate to get in touch. Tax Lien Code would be happy to help you out!

By admin