In effect, mortgages and other liens will be wiped out upon sale and investors will acquire title free and clear of encumbrances. The rationale behind this is that the law expects lenders or other lien holders to step in a pay the delinquent property tax bill if they wish to protect their interest in the property.

How can a lien affect my closing date?

It is usually the consequence of unpaid taxes, a court judgment, or unpaid bills. The most common types of liens are mechanic’s liens, judgment liens, and tax liens. A mechanic’s lien happens when general contractors or other repair professionals file a lien on a property before work is done to ensure they get paid.

How does buying a tax lien certificate work?

The defaulted property then goes to a tax deed sale in which bidders can compete to purchase the property. Successfully buying a tax lien certificate or tax deed requires learning a very simple process. The process starts with learning how to research properties of interest. Then, you learn how to participate in the various forms of auction.

Can a tax lien prevent a clear title?

Those debts are listed as liens on the property title, preventing it from being a clear title. If a tax lien has a higher priority than another lien, the other lien is wiped out at the time of sale. Mortgages are subordinate to taxes; therefore any loan taken on the property is released at the time of sale.

What are the different types of tax lien auctions?

There are various forms of bidding which are profiled below. No matter which strategy is involved, the goal is to acquire the tax lien certificate to earn interest income, and depending on the state, income from penalties. 2. Tax Deed Auctions Tax deed auctions also may be held live and on-site or through various online auction platforms.

How does a county sell a tax delinquent property?

Counties hold two types of sales for tax delinquent property, whether it’s for tax lien certificates or tax deeds. Some use an auction process and others use a direct sale. There are four ways tax delinquent property is sold: 1) tax lien auctions; 2) tax deed auctions; and 3) tax deed sales.

What’s the difference between a tax lien certificate and a sale?

A tax lien certificate sale, on the other hand, does not convey ownership of the property. Rather, the taxing authority sells its lien and the purchaser receives a tax lien certificate.