By Ted Thomas— The most common question I hear is “What is a tax lien certificate?” It is truly amazing how many people are not aware of this centuries-old investment vehicle.
What Is A Tax Lien Certificate?
The United States is a country where the majority of citizens own real estate, either residential or commercial – more so than any other country in the world. We have one of the highest concentrations of wealth globally1. And the most valuable asset in the majority of investment portfolios is real estate.
Even though the housing bubble in recent years forced many people out of their homes, real estate ownership is still the goal to which most Americans aspire.
One of the costs of real estate ownership which cannot be avoided is the payment of taxes. Imposing property taxes to pay for civil services such as roads, libraries, schools, police and fire departments has been in effect in the U.S. and Canada since the countries became independent over 200 years ago. These taxes are usually levied annually.
In the U.S. there are 3,000 counties and over 1,400 municipalities that are classified as tax entities, sometimes called districts.
What happens if the property tax bill is not paid? The county government authorities do have remedies. They could repossess the property, but unlike vehicles or other goods, real estate can’t be moved. Instead, the government places a lien on the property.
A lien is similar to a mortgage, meaning that until the amount due is paid, the property is not owned free and clear. A delinquent tax lien is considered a senior lien – the government must be paid before any other debtors when the real estate is transferred or sold.
But the lien is not beneficial to the municipality because it doesn’t fill their coffers with the money needed to pay for city and county services. In order to get their money right away, the municipality will offer tax lien certificates for sale to the public. This is usually accomplished with an annual, or more frequent, auction.
When the tax lien certificate is sold, the government collects their revenue and the property owner receives notice of a lien against their property, giving them time to pay the delinquent bill. The purchaser of the certificate gets the lien certificate, which is secured by the actual real estate.
In order to remove the lien, the property owner must pay the amount of the unpaid taxes plus any applicable interest and penalties. When this revenue is received, the government authority sends a check to the tax lien certificate holder for the face amount plus the amount of interest accrued.
What If The Tax Isn’t Paid?
Sometimes the property owner just doesn’t pay the taxes due, for one reason or another. It may be that the real estate became part of an estate and the heirs don’t want the property – or can’t afford it. How much time elapses between the taxes going unpaid and the municipality deciding to give up on ever receiving the revenue varies by tax district.
According to county treasurers across the United States, 95 to 97 percent of all people pay the delinquent tax in 24 months or less. It’s rare that a property owner fails to redeem the Tax Lien Certificate, but it does happen. Nationwide, every year there are thousands of buyers who end up with property for only the cost of back taxes.
If the property owner fails to pay taxes, the tax lien certificate holder is given the property. In exchange for paying the taxes, the county or municipality sends the tax lien certificate purchaser a deed, giving them the fee simple right to keep or sell the real estate.
Where To Find Tax Lien Certificates
Where can you find tax lien certificates that are up for auction? Local governments compile a list of delinquent property owners on a regular basis. This list can be found in one of three places: the newspaper, online, or a printed list available directly from the government office.
When you obtain the list, you can also get instructions and the date of the next auction of tax lien certificates.
Advantages of Tax Lien Certificate investing
This investment is safe, secure, and predictable. Each county has its own rules, but in all cases the tax collector does the work. There are no commission fees to a broker. You pay the government and your original investment plus interest is reimbursed by the government. You will get paid when the government, in most instances, is paid guaranteed.
Ted Thomas is famous for showing newcomers and investors how to earn 6 figure incomes within 1 year of completing his training program. Conservative investors love tax lien certificates because they are predictable, certain and secure and sold by local government. Tax defaulted properties are sold at oral big auctions and online. Starting bid, only the back taxes! See more information at TedThomas.com.
Ted Thomas, best-selling author and publisher is best known as America’s Tax Lien Certificate and Tax Deed Authority. Thomas has sat for more than 200 radio and TV interviews, most recently on ABC, CBS, NBC and Fox and he has been recognized in Newsweek, USA Today and the Wall Street Journal. Ted Thomas is the go-to guy when people want to discover how to invest in secure government certificates that pay 16% and 18%.
Ted Thomas’ organization is the single largest “Source” of Tax Lien & Deed Informational Products in the World…To Help You… We are knowledge brokers and we provide financial solutions in many forms.
For example: Guidebooks and Manuals, Directories, Newsletters, Audio Home Study Courses, Video Learning Systems, plus Live Weekly Teleconference Sessions, Workshops, Seminars and Coaching.
Ted’s best selling Home Study Course titled, Quick Start to Buying Government Tax Lien Certificates & Tax Deeds, is considered the benchmark standard for the Tax Lien Certificate and Tax Deed industry. Thomas also conducts live tours of Tax Lien Certificate and Tax Deed auctions.
In summary: Jones & Trevor Marketing is the single largest “SOURCE” of the Tax Lien & Deed Informational Products In The World!