Tax Lien Question - Please Help

4 Replies

What type of taxes can make a property go to a tax lien sale? 

I recently reviewed a list from a local township, and it looks like more than real estate taxes are considered with regard to tax liens (e.g. water/sewer, public utilities).  

Can someone explain a little bit more about this?

Also, I understand the process as follows:

1) purchase lien

2) the township does the work to colllect the debt 

3) once debt is paid, I get paid the interest (pro-rated)

Is this correct? 

Thank you everyone! 

It differs state by state, and even county by county.  Georgia, for instance, has nothing called a "township."  In the City of Atlanta, unpaid water bills can constitute a "tax lien," while in Forsyth County, that would not be the case.  You'll need to get info specific to the taxing authority where you're looking to purchase.

Thank you. I will ask for further clarification from the specific tax authorities. I will ask if they will continue collection efforts or if collection efforts become my responsibility.

@Bill Glick the tax sale laws change dramatically from state to state and sometimes local jurisdiction to jurisdiction. 

In general you have it right but there are a lot of details, and as they say that is where the devil is. tax liens are sold at auctions. Sometimes you are bidding up the price of the property you will pay. Sometimes you are bidding down the interest rate and sometimes it is both. 

Generally the city or county will collect for you and send you the proceeds. How much you get paid depends on your bid and the specific laws. There may be a penalty rate like X% if paid in the first 6 months. That means you get the x% whether paid after 1 day one 180 days. Sometimes it is a monthly rate and sometimes a daily rate. 

If the owner does not redeem (pay off the taxes) you have to foreclose to recoup your investment. You need to make sure the property is valuable enough to cover not only your investment but the costs to acquire the property. 

In Baltimore city a Property tax lien can include, the property taxes for multiple years, water bills, and citations against the property.