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What are Tax Lien Foreclosures?

Almost everyone has heard about foreclosures but not too many have heard about tax lien foreclosures.

To explain how this works you must first understand exactly what a tax lien is. People that own or are buying property, must pay property taxes. Normally, when you are purchasing property the lending company adds the property taxes to your mortgage payments and it is divided up throughout the year. When you own the property, you can pay your property taxes either quarterly or in one lump sum yearly. The taxes that you pay on your property are used by the government to pay for a variety of things throughout your community. When the property taxes are not paid, the government does not run as smoothly and things such as roads deteriorate, parks are unkempt and so on and so forth.

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Now, when a person does not pay their property taxes the government will put a tax lien against the property. Then they will auction off the property at what is called a tax lien sale. The person buying the tax lien can earn a certain amount of money or percentage interest rate. When the property owner comes to pay off their debt to the county clerks office they will have to pay all the taxes that were owed plus any penalty fees. The county clerk's office will then issue a check to the buyer of the tax lien. The buyer will receive his initial investment, penalty fees and any interest that has incurred.

This can be a win-win situation. The property owner has a longer time in which to pay his taxes, even if he does have to pay penalty fees, the government has the money it needs to run the county properly and the buyer of the lien makes extra money just for purchasing the tax lien. In most cases, the buyer of the tax lien can earn a large bundle of money.

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Many real estate investors are now turning to purchasing these tax lien certificates. It is an easy way in which to invest in real estate, it yields very high profits and there is no need for large investments.

If you are interested in investing in tax lien foreclosures then you should begin by watching the newspaper or contacting the county clerk's office to learn when the next tax lien sale is coming up. Investing in this opportunity is safe, secure and you will earn high percentage interest.


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