Buying Tax Liens

Copyright (c) 2010 Jack Bosch

Sometimes, property owners refuse to pay their property taxes; this could be either because they do not want the property anymore or simply because they cannot afford it any longer. When a property owner stops paying his taxes, the property becomes tax delinquent, getting the local governing authorities involved in making arrangements to collect this outstanding tax amount. Instead of bothering the tax delinquent property owner, the authorities conduct a tax auction on the property.

So, what is a tax lien auction? It's an auction carried out under the orders of the court. A tax lien auction can be classified as either a Tax Deed Sales or Tax Lien Certificates, depending on the relevant State and the sales nature. The minimum bid acceptable at any tax lien auction is the total of back taxes and interest owed by the tax delinquent, as well as the property sales costs. If a property is not purchased at one of these auctions, it's reverted to the government. The government then tries to sell the property in a public auction or put the property up for sale for private buyers.

Tax liens can be bought at these auctions usually held on an annual basis in each State. The process of buying a tax lien does not involve much competition, but in case there are many buyers, the winning bidder will be chosen by following one of the procedures outlined below, which depend on the property's State.

Bidding Down The Interest: The rate of return offered by the government is the highest allowed. Therefore, the investor offering the lowest rate of return wins.

Premium: The investor paying more than the lien amount, or a premium wins the bid.

Random Selection: Usually computerized, the winner is chosen completely randomly.

Rotational Selection: As tax lien auction have many liens for sale, the first lien is offered to the first bidder and if he passes over, it's offered to the second bidder. This pattern follows throughout the auction.

Sometimes, several tax liens remain without been auctioned, either because no one has bid on them or the forwarded bids are not acceptable. In this case, the tax lien can be bought independently at a later date by approaching the relevant authorities, generally through an over-the-counter process.

A tax lien auction does not require a physical presence and many options exist for the investor. Some tax lien bids are accepted via the web or mail. Despite this, it is a better practice to be present at the auction, as it gives you a better chance of ruling out errors.

Buying tax liens is indeed a very wise investment, although, many are still skeptical about it. It is worth getting your feet wet in the river of tax liens; but be forewarned - do your homework and research before buying tax liens.


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Jack Bosch began investing in land in 99. Along the way he discovered a secret way to buy land for pennies on the dollar and sell it for thousands. Jack continues to invest in property but now teaches his system! To claim a FREE Special Report about how you can buy Land for Pennies on the dollar go to www.Landprofitgenerator.com/jack-bosch