There is one common mistake that an eager, new participant in tax liens investing  makes that can end up with the investor ending up being liable for all the other liens, or even the original owners mortgage payments on the property. Tax lien certificates or tax deed sales, can be a profitable investment, but it is important to understand fully the laws of the individual state where the property is located.  With 50 states, there are 50 different procedures and laws governing these kind of sales so anyone involved in tax liens investing needs to do their homework before jumping in.

About once or twice a year, counties will put up for auction the lien certificate or even the actual deed to properties who are seriously delinquent with real estate taxes. Notice is placed in the newspaper, and often online four weeks ahead of time. This gives those interested in purchasing one of these the opportunity to research the property and the current owner a chance to pay the taxes. Legally these are often referred to as tax foreclosure sales.

A common practice found in most states is that any other liens on the property will we erased as part of the procedures of tax sale, so the purchaser will not then be responsible for any other liens that were placed on the property. However this is not the case in all states. As you can see, this becomes a crucial piece of information for tax liens investing opportunities that should be known well before any bids are placed on a property in a tax lien certificate or tax deed sale. There are also situations in the states where most liens are wiped out with the tax sale, where some of these liens could survive the sale.

For example one state has three different typed of deed sales. A judicial sale, a repository sale and an upset sale. Most liens will be erased during the process of a judicial or repository sale, but all of the liens stay attached with the upset sale. Anyone purchasing a deed at an upset sale would become liable for all the liens attached to the property.  If the liens are not paid, the property can be lost.

The bottom line is before getting involved in tax liens investing in a particular state, you will need to know which liens survive a tax deed or tax foreclosure sale, and how to check for these liens  ahead of time.

Hope you enjoyed the article…

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