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There are times when a property owner is
unable to pay the required property tax. At such a time they become
a delinquent taxpayer and the appropriate governing authority is in
charge for collecting property taxes. This collection can be
achieved by a tax auction. That brings us to the question What is a
Tax Lien auction? A Tax Lien auction is a court-ordered auction.
Depending upon the state and the nature of sales it can be an
auction for tax deed sales or tax lien certificates.
In case of an auction for the tax deed, the property is sold to
satisfy the existing delinquent taxes. An auction of the tax lien
certificate involves selling a certificate to claim the total sum of
taxes owed and any administrative charges and interest on the amount
owed.
If you purchase a tax lien certificate, you are
required to make the payment against the required property taxes for
the delinquent taxpayer. In turn, the delinquent taxpayer is
required to pay back the amount of the lien plus interest charges,
usually 16-18%, to you. This allows you to have two options a higher
percentage of interest in case the repayment is made, or the
possibility of the deed of the concerned property if the delinquent
taxpayer fail to repay.
A court-appointed referee
carries out the auction. At the beginning of the auction, the
referee announce the terms of the sale, the required deposit to be
made at the auction. Usually, you are required to pay 10% in form of
a certified check which are payable to the referee.
Remember, the properties sold in these auctions are sold "AS IS,
WHERE IS, WITH ALL FAULTS". Even if a property is under a tax lien
foreclosure, you do not get right to enter the property for an
inspection. You are required to place your bid accounting this
uncertainty. You should investigate the property as best you can,
but you cannot inspect the interior prior to the sale.
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