A couple questions on tax lien investments

[Tim Ball]

Lets say the interest on a tax lien you purchase is 12%. That 12% is annual interest rate.  Lets say the lien you bought was $10k. If the homeowner pays the tax lien off in 3 months, do you still make 12% on your money or do you only make 3% since it was paid off before a full year?

Second question,  if you buy a tax lien and the investor does not pay it off and you decide to start a foreclosure on the property, do you run the risk of other liens on the property such as mechanic liens, IRS liens, etc.  If those liens are present during foreclusure, will you be responsible at that point for those liens now after taking possession?

Thank you for your responses.

[Jeremy Tillotson]

@Tim Ball no legal or accounting advice, not a lawyer. However in Indiana, a tax lien would be 10% due in first 6 months and 15% due in 6-12 months. so if lien was paid off in 6 months then would be 20% APR. I think this is currently getting changed. However the tax lien is a superior lien, except for a very few items. However having said that you will not be able to insure the title without going through tax tittle services or quiet title suit. Hope that helps.