How to Obtain Liens
Local and state governments sell tax liens directly and at regular auctions. These securities allow other individuals to pay back property taxes on a house for another person. If the delinquent taxpayer defaults on the lien, the new lien holder may then seize the property. If all goes well, tax lien investing can be a powerful method for acquiring property at below-market rates. The primary risk of tax lien investing is that the person who owes the taxes may declare bankruptcy, which can potentially make the lien worthless.
Other People Are Reading
Instructions
-
-
1
Save up sufficient funds to purchase a tax lien. There are no mortgages for tax liens, so you will need to purchase the lien in cash at the time of auction or sale. You will not be able to view the property that the lien is held upon until you actually own the lien. Liens are speculative investments that may or may not turn a profit.
-
2
Review the laws about tax liens for the state that you are interested in purchasing them. Some states have special rules for liens. Texas, for example, guarantees a percentage return on the lien to all purchasers, even if the person that the lien has been placed on defaults on the lien.
-
-
3
Contact the county department of taxation where you would like to invest in tax liens to inquire about dates for lien auctions and whether the office sells any liens directly. Depending on the population density of the county and the number of liens up for sale, auctions are usually held once or twice a year.
-
4
Attend a scheduled lien auction or purchase a lien directly. Once you own the lien, you will be responsible for collecting on the tax debt. If the individual fails to repay the taxes, you will gain title to the house and will be allowed to begin foreclosure proceedings to gain physical possession.
-
1
