Buying a Tax Lien Certificate

11 Replies

Hi Everyone,

I am looking for any guidance on purchasing a Tax Lien. My husband and I were leaving a Barbeque yesterday and saw a "For Sale" sign on a property that looked like a good investment so we took pictures and when I got home I checked on the property on the registry of deeds. I saw that there is a Municiple Tax Lien Certificate filed and I have heard that you can purchase these. Is it as simple as just calling that Town that put the Lien on the house and offer to buy the Lien Certificate for the face value? I believe there is a 90 day grace period and that will be coming up on May 1st. If the house doesn't sell and the Lien is not paid (if I am able to purchase it) would the house become my property????

Susan, I should defer to someone with more local Tax lien experience for your area, but likely an investor already owns the lien. Here is what I would do...

Call your local tax office (the office which issued the lien) or your local records office to find out who owns the note. There is the chance that the city or county wasn't able to auction the note off, in this case you may be able to purchase the note directly or go to a follow on auction.

If someone else owns it you may be able to get in touch with them to buy it but I doubt it'd go for face value + interest. As always consult your local statutes, a RE attorney and other local resources to ensure this is actually a good investment for your family. Good luck

@Susan Bearce

I have never been to your part of town or MA nor I have participated in your county tax sale.

This limited info below may help you. I will suggest  calling  the tax commissioner office( may have a different name for your county). Asking them when will be the next auction. Is the parcel that you have interest coming up for auction or someone bought the TLC already.

MA is a redeemable tax deed state.

 Massachusetts tax deed auctions are held on a local municipality level at various times.The municipalities take ownership of the delinquent property prior to the auction and then sell the property at auction. Selling process of the tax delinquent properties varies depending on the taxing municipality .Some municipalities will hold some type of public sale while others may retain the property for municipality use. After the sale, the successful winning bidder receives a tax deed, which is subject to a six-month redemption period. If the property owner redeems the property during the six-month redemption period they must repay the purchase price of the tax deed plus 16% interest.Otherwise the purchaser of the tax deed will receive the full deed to the property at the end of the redemption period. 

Also MA is a premium BID state. I do not know whether the statue allows interest on premium; spent few minutes & ask for the person/department that looks after tax delinquent sales. Also ask if they have a OTC(over the counter) lists. The property that you are interested may be on those lists.

While you are calling the county office, ask them if you need to clear title after you receive the tax deed.

Hope this helps.

Thank you Tom - I started researching the rules and I thought about calling the Town Hall and talking to the assessor to find out more. When I researched the title on the county website I noticed the property was a Living Trust and then there was a POA listed of a local attorneys office in Boston. It looked like the property would consistently go to the last minute reach year and then the Taxes would be paid. The difference now is it is up for sale. I will call the local Town Assesor and find out what the story is. I am hoping they will offer it to me at face value. I will keep everyone posted on this one. It seems like there is a story to tell.

@Susan Bearce a living trust that sounds like  the lawyer could be an estate lawyer, when someone passes away is in charge of the estate and its affair. I am interested in this story....

@Tom Yung interesting I wonder where you acquired the knowledge on the rules regarding tax liens....

@Christopher Rodriguez

After buying REO & short sales back in 2011& 2012. I came across tax lien/deed investing.

I am only doing tax sale investing now. I found it the best way to park my money. I like redeemable states; it acts both as a lien with high interest & at the end; you can end up with a property at times. SC, GA & TX are redeemable states. I am more familiar with GA & TX

@Ned Carey & @Jerry K. posted about a lot of lien related topics on BP.

@Denise Evans for AL

To answer your question, best place to find out info on tax sale investing is county tax commissioner web site. If in doubt, they are just a phone call away, when calling. Please be patient, sometimes it is very difficult to find the right person(s) that handles tax sales.

This can also be a very risky investment; since you can not step foot onto & inside the property that you are bidding on, there are many unknown factors & risks.

Figure out your Exit strategy first before bidding. This will affect your decision on states that have premium bid.

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@Tom Yung is there any concerns regarding buying a Reo? As I plan to acquire one? Apart from taxes and the previous lien holders

@Christopher Rodriguez

REO is much easier than buying at tax sale. Pros, no waiting period, clean title, have right to do due diligence. Cons; mainly price & less windows for due diligence.

I am going to give you one example on a property that I get redeemed 2013 by asset manager for Wells Fargo.

If you open up price history, You will see my tax deed was registered on July 11, 2013 for $30,100.00. Two weeks later, Asset manager called me to redeem. I made $6,020 in 2 weeks. On August 16,2013, they foreclosed & registered. It took the bank 3 months to get rid of the tenant & listed the property for sale @$75,000. This is the REO price.

Hey Everyone,

Okay so mystery solved, I called the Town Tax Collector and asked about the Tax Lien and she explained that what I was looking at was a Municple Tax Certificate which is not the same as a "Lien" on the property, but rather a book entry on taxes for potential buyers of the property. It does not operate the same as a Tax Lien for collection. It shows what is potentially owed for taxes once the property goes to agreement. Also, I asked if the home was occupied and I was transferred to the Board of Health. I spoke to a nice woman there who said the House had sold a week ago and that it was condemned because of Black Mold throughout the back of the house. She said the person who purchased the home was tearing it down and rebuilding to flip. And so that is my lesson on "Perceived" Tax Liens. Obviously someone with "Deep Pockets" got this deal. I will go back and check what the house sold for. 

Thanks everyone! 

@Tom Yung

I like your REO story and hope to look into those as well. I am still hunting down deals and I actually was contacted by a Broker who has experience with Foreclosures so I am going to see what happens. I think I may have a harder time finding deals because Mass is a very expensive state, especially along the coast which is where I live.

@Susan Bearce it is all part of the learning curve i guess, i am lining up financing this is why i am  so interested in your post. its good to learn from others and then take action !

@Tom Yung    i did look into it and wow, but you have to become very informed when engaging in any/all parts of this business i am pretty sure tax liens are not the first place you began your investing career..... i have access to all pre foreclosures and foreclosures nationwide that is why i want to beginning there..... although verification is in order

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