Real Estate Investment Tax Lien Certificates Key Terms

Discover pros and cons of real estate investment through tax lien certificates

When you know real estate investment tax lien certificates key terms, you'll be able to identify whether or not the pros and cons of this type of investment are worth the risk. Tax liens are a specific way an investor can attempt to purchase property, but there isn't a guarantee that the investor will wind up owning it. There are other things to consider, such as the grace period and the redemption price.

 

Tax lien sale

When a person, company or organization fails to pay the taxes owed, the government places a tax lien on the property. After a set amount of time, the government may use an auction to sell the tax lien to real estate investors. The investors pay the tax lien and then have options on ways to recoup the investment, and in some cases, make a profit.
Try: Nationwide Environmental Title Research offers details on a tax lien sale and includes information for investors wanting to know how the process works.

Real estate taxes

The county and state determine the tax owed for properties that fall within their jurisdiction. The government bases taxes on the property's value as it relates to other properties in the area.
Try: The NY Office of Real Property Services provides an overview of how property tax works.

Grace period

The grace period, or the redemption period, is the amount of time an owner has to pay the taxes and any fees associated with the tax lien. If the owner completes the payoff within the grace period, the title reverts to the mortgage lender or property owner. The redemption period varies by state.
Try: Delinquent Tax Sales offers a list of redemption periods for different states.

Special assessment

A special assessment is a fee owed by an owner for certain improvements to the property. This can include installing city sewer or water to a subdivision. Failure to pay a special assessment may result in a lien on the property.
Try: The official website for Larimer County, CO describes how the county may originate a special assessment against a property.

Redemption price

The redemption price is the amount a property owner must pay in order to clear the tax lien. It can include the original amount for taxes plus additional fees like interest, special assessments or auction fees.
Try: Carreon and Associates offers information that tells how home owners can settle and remove a tax lien.

Tenant eviction

When a property owner fails to pay the tax lien, the tax lien holder, or investor, gets the title to the property. In order to claim ownership, a tax lien holder may need to evict the owner and/or file for foreclosure.
Try: Fein, Such, Kahn and Shepard covers how a tax lien foreclosure works.

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