Frequently Asked Questions
Q: What is a Tax Lien?
A: A Tax Lien is a right by a tax collecting agency (federal, state, local) placed on a property to keep said property in the event tax obligations are not paid during a required period of time.
Q: Who issues a Tax Lien?
A: Tax Liens are placed on properties by either the Internal Revenue Service (IRS), or local county or city municipalities?
Q: When is a Tax Lien issued?
A: Tax Liens are issued based on the fiscal arrangements set up by the governing body the regulates the taxes. Times can vary
Q: Why would a taxing authority issue a tax lien for sale?
A: Taxes are one form of revenue that provides the goods and services that a municipality (federal, state, local) need in order to properly operate. When a property owner fails to pay their taxes on time, some municipalities impose a lien on the property to encourage the property owner to pay the past due taxes and when that time has expired with no payment, some of these municipalities offer these liens for sale in order to raise the missing revenue. In order to make purchasing these liens attractive, these municipalities offer various incentives such as interest and/or penalties (all to be paid by the property owner that the lien is attached to).
Q: How much interest can one make from purchasing Tax Liens?
A: Again, interest gained can vary from state to state. Some states add penalties and some states have varying lengths of time in which the lien can redeem.
Q: What is a redemption period?
A: The redemption period is the time allotted by the state/county issuing the lien for sale for the property owner to pay back the overdue taxes with the penalty and/ or interest owed. When that time expires, the lien holder would then have the right (as defined by the laws in the state/county in which the lien was purchased) to pursue ownership of the underlying property the lien was attached to.
Q: What is the process of investing in Tax Liens?
A: The process of investing in Tax Liens vary from state to state and county to county. Not every state issue tax liens for sale and not every county in a state that does offer tax liens for sale abide by the same rules.
Q: Do I have to pursue the property owner to pay me the lien I purchased?
A: In many cases, no. In fact, in some areas, there are laws forbidding contact from the lienholder with the property owner. Don't worry, in most cases, outside of the interest gained, the other aspect that makes buying tax liens attractive is that most of the work required for issuing notices and collection of funds are done by the municipality that sold the lien.
Q: Are tax lien a risky investment?
A: On average, 95% of all tax liens purchased redeem within the time period allowed; however, any investment carries with it a level of risk. It is wise to therefore seek the advice of an attorney, certified financial planner, or certified financial planner if you are unsure whether purchasing tax liens would work for you.
Q: If tax liens provide such promising interest rates, how come more people are not investing in them?
A: First, their loss is your gain. Would you like more or less people to compete with to get the interest rates tax liens offer? Remember the liens are tied to underlying property in a given area and unless that area is expanding (physically and geographically speaking), it becomes a fierce competition, which would leave you left out based on your level of experience. Second, tax lien investing can be a time consuming event. Research, and auction attendance is required and most if not all municipalities hold the sale during normal business hours of Monday-Friday, 9AM-5PM; which leaves many unable to attend for whatever reasons. Third, distance can play a huge factor why someone may or may not purchase tax liens. For example, say your local municipality does not offer tax liens for sale, but you hear of a sale two states away that not only offer tax liens for sale, but at an interest rate that appeals to you. Say you have only $1000 (arbitrary number) to use at the sale. There is going to be the cost of not only travelling to the auction, some municipalities require registration, which may be a fee (most times to obtain the list of liens available for auction), and time and/or cost or research to ensure that property that the lien is attached to would be valuable enough for someone to repay the lien. Just the time and cost of travelling alone deters people because it would take a huge chunk out of what they planned to spend at the auction.
This is where our services come in. We look to help get you to those sales that you have been looking at, but for whatever the reason, have been unable to attend.
Q:What is a Tax Deed?
A: A Tax Deed is a document issued by a taxing authority (by law) conveying all rights of ownership to a new owner from a previous owner for failure to pay back taxes
Q: What is the difference between a Tax Lien and a Tax Deed?
A: A Tax Lien is the right to the money owed by the property owner, a Tax Deed is the right to the property from a previous owner. A Tax Lien does not give you the right to either access or make changes to any property that it is attached to. A Tax Deed gives you all the rights of a property owner.
Q: Does a Tax Lien become a Tax Deed?
A: No. Municipalities initiate steps in which the lienholder can pursue obtaining a deed to the underlying property once a redemption period has expired. Some hold another round of auctions for the property, some require going through the legal system, and some require that specific paperwork and notification be submitted within a given period of time.
Q: Do I have to purchase a Tax Lien in order to be eligible to obtain the Tax Deed?
A: No. In many states, tax liens are never issued for sale to the public. The municipality gives the property owner a certain period of time to pay off the back taxes and if that does not happen, the property is then offered up for sale at auction for the taxes owed.
Q: Are Tax Deeds risky?
A: Tax Deed auctions allow you the potential of picking up property at deep discounts. Tax Deeds hold the same risk as purchasing real estate, because that is what is actually happening. It is wise to therefore seek the advice of an attorney, certified financial planner, or certified financial planner if you are unsure whether purchasing tax deeds would work for you.
A: A Tax Lien is a right by a tax collecting agency (federal, state, local) placed on a property to keep said property in the event tax obligations are not paid during a required period of time.
Q: Who issues a Tax Lien?
A: Tax Liens are placed on properties by either the Internal Revenue Service (IRS), or local county or city municipalities?
Q: When is a Tax Lien issued?
A: Tax Liens are issued based on the fiscal arrangements set up by the governing body the regulates the taxes. Times can vary
Q: Why would a taxing authority issue a tax lien for sale?
A: Taxes are one form of revenue that provides the goods and services that a municipality (federal, state, local) need in order to properly operate. When a property owner fails to pay their taxes on time, some municipalities impose a lien on the property to encourage the property owner to pay the past due taxes and when that time has expired with no payment, some of these municipalities offer these liens for sale in order to raise the missing revenue. In order to make purchasing these liens attractive, these municipalities offer various incentives such as interest and/or penalties (all to be paid by the property owner that the lien is attached to).
Q: How much interest can one make from purchasing Tax Liens?
A: Again, interest gained can vary from state to state. Some states add penalties and some states have varying lengths of time in which the lien can redeem.
Q: What is a redemption period?
A: The redemption period is the time allotted by the state/county issuing the lien for sale for the property owner to pay back the overdue taxes with the penalty and/ or interest owed. When that time expires, the lien holder would then have the right (as defined by the laws in the state/county in which the lien was purchased) to pursue ownership of the underlying property the lien was attached to.
Q: What is the process of investing in Tax Liens?
A: The process of investing in Tax Liens vary from state to state and county to county. Not every state issue tax liens for sale and not every county in a state that does offer tax liens for sale abide by the same rules.
Q: Do I have to pursue the property owner to pay me the lien I purchased?
A: In many cases, no. In fact, in some areas, there are laws forbidding contact from the lienholder with the property owner. Don't worry, in most cases, outside of the interest gained, the other aspect that makes buying tax liens attractive is that most of the work required for issuing notices and collection of funds are done by the municipality that sold the lien.
Q: Are tax lien a risky investment?
A: On average, 95% of all tax liens purchased redeem within the time period allowed; however, any investment carries with it a level of risk. It is wise to therefore seek the advice of an attorney, certified financial planner, or certified financial planner if you are unsure whether purchasing tax liens would work for you.
Q: If tax liens provide such promising interest rates, how come more people are not investing in them?
A: First, their loss is your gain. Would you like more or less people to compete with to get the interest rates tax liens offer? Remember the liens are tied to underlying property in a given area and unless that area is expanding (physically and geographically speaking), it becomes a fierce competition, which would leave you left out based on your level of experience. Second, tax lien investing can be a time consuming event. Research, and auction attendance is required and most if not all municipalities hold the sale during normal business hours of Monday-Friday, 9AM-5PM; which leaves many unable to attend for whatever reasons. Third, distance can play a huge factor why someone may or may not purchase tax liens. For example, say your local municipality does not offer tax liens for sale, but you hear of a sale two states away that not only offer tax liens for sale, but at an interest rate that appeals to you. Say you have only $1000 (arbitrary number) to use at the sale. There is going to be the cost of not only travelling to the auction, some municipalities require registration, which may be a fee (most times to obtain the list of liens available for auction), and time and/or cost or research to ensure that property that the lien is attached to would be valuable enough for someone to repay the lien. Just the time and cost of travelling alone deters people because it would take a huge chunk out of what they planned to spend at the auction.
This is where our services come in. We look to help get you to those sales that you have been looking at, but for whatever the reason, have been unable to attend.
Q:What is a Tax Deed?
A: A Tax Deed is a document issued by a taxing authority (by law) conveying all rights of ownership to a new owner from a previous owner for failure to pay back taxes
Q: What is the difference between a Tax Lien and a Tax Deed?
A: A Tax Lien is the right to the money owed by the property owner, a Tax Deed is the right to the property from a previous owner. A Tax Lien does not give you the right to either access or make changes to any property that it is attached to. A Tax Deed gives you all the rights of a property owner.
Q: Does a Tax Lien become a Tax Deed?
A: No. Municipalities initiate steps in which the lienholder can pursue obtaining a deed to the underlying property once a redemption period has expired. Some hold another round of auctions for the property, some require going through the legal system, and some require that specific paperwork and notification be submitted within a given period of time.
Q: Do I have to purchase a Tax Lien in order to be eligible to obtain the Tax Deed?
A: No. In many states, tax liens are never issued for sale to the public. The municipality gives the property owner a certain period of time to pay off the back taxes and if that does not happen, the property is then offered up for sale at auction for the taxes owed.
Q: Are Tax Deeds risky?
A: Tax Deed auctions allow you the potential of picking up property at deep discounts. Tax Deeds hold the same risk as purchasing real estate, because that is what is actually happening. It is wise to therefore seek the advice of an attorney, certified financial planner, or certified financial planner if you are unsure whether purchasing tax deeds would work for you.