Tax Sales, Tax Lein Certificates and Short Sales

Tax sales and tax lien certificates are two totally different things.

Tax sales refer to the transfer of the land to you the buyer. The sale actually occurs only once the time limits for redemption have expired and the previous owner has still not brought the tax arrears up to date. Once that time period has gone by, the county or municipality can sell full title to the lands, including any buildings.

Any mortgages will not run with the property, but will be removed from title.

Tax lien certificates on the other hand are a bit different. Once the previous land owner is in arrears in their taxes, they will receive several notices to bring the taxes up to date and in good standing. If this does not occur within the time limit imposed by the governing authority, a lien will be placed upon the property.

The municipality or the county still needs those funds for the running of their business and will offer a "tax lien certificate" to the public.

What this means is that the governing authority is requesting money from the public and they are willing to pay interest on that money. Rates of interest vary from about 7% to 24% and vary from state to state.

You can research what properties are currently for sale or which properties are offered by the county recorder or municipality byway of tax lien certificate.

Tax lien certificates usually run a set term. For instance let's say the previous property owner missed his taxes for 2 years in a row. You bought the tax lien certificate. What did you buy?

You bought a debt instrument for a set interest rate and the previous owner has a set period of time in which they can pay you back, plus accrued interest. Once that time period has passed, and if the previous owner has not paid you back within that time period (referred to as the Period of Redemption) you then have the right, as established by the governing authority to apply for title to the property.

You may have to pay registration fees, so make sure you know what you're buying, and what other fees you may incur before you can get the Deed registered in your name.

Some states, counties or municipalities only have a once annual sale, others have them at pre-set times, and others have them occurring at different times during the year.

States such as Texas offer an excellent rate of return on tax lien certificates. Provinces such as British Columbia offer tax sales of properties only once a year, one day only for the entire province usually in September.

There is good money to be made, but it requires a lot of leg work, persistence, travel and expense.

Learn the ropes first before you spend a lot of money.

Short Sales are another very good source of acquiring property and earning money. This field of endeavor isn't for everyone, but it can be done effectively and to your advantage with a bit of persistence and knowledge.

To learn more about short sales, you'll often find many gurus out there trying to take your money.

You have a few options, one is try their product, or if there is a property you'd like to bid on - by all means contact the realtor that has it listed or the lender if it isn't listed.

What they're asking and what you're offering are two totally different things.



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