SAVVY INVESTORS EARN 16%, 18%, UP TO 24% ON GOVERNMENT TAX LIEN CERTIFICATES... TED THOMAS
Tax Default
What happens if the property tax bill is not paid? The county government authorities do have remedies. They could
repossess the property, but unlike vehicles or other goods, real estate can't be moved. Instead, the government places
a lien on the property.
A lien is similar to a mortgage, meaning that until the amount due is paid, the property is not owned free and clear. A
delinquent tax lien is considered a senior lien – the local government must be paid before any other debtors if and when
the real estate is transferred or sold. The lien is not beneficial to the municipality because it doesn't fill their treasury with
the money needed to pay for city and county services. In order to get their money right away, the municipality will offer
tax lien certificates for sale to the public. This simply means, the defaulted taxes are sold at auction to willing investors.
Investor’s purchase tax lien certificates because the county gives the investor a high interest rate and a secure position
on the real estate.
The local government challenge is…
To collect property taxes. This is usually accomplished with an annual, or more frequent tax lien certificate
auction or a tax defaulted property auction, today we’re talking about tax lien certificates. When the tax lien
certificate is sold, the government collects their revenue from the investor and the property owner receives a
notice of lien against their property, giving the property owner time to pay the delinquent bill. The purchaser of
the certificate gets the lien certificate, which is secured by the actual real estate.
In order to remove the lien, the property owner must pay the amount of the unpaid taxes plus any applicable
interest and penalties. When this revenue is received, the government authority sends a check to the tax lien
certificate holder for the face amount plus the amount of interest accrued.
What If The Tax Isn't Paid?
Sometimes the property owner just doesn't pay
the tax lien certificate which represents the taxes
due, for one reason or another, it may be that the
real estate became part of an estate and the heirs
don't want the property or can't afford it. How
much time elapses between the taxes going
unpaid and the municipality deciding to give up on
ever receiving the revenue varies by tax district.