Tax Lien and Tax Deed
Investing
The tax lien Certificate and tax deed Process and How
it Works
The entire tax lien certificate process begins when a property owner lets their real estate
property taxes go unpaid. To get the money they are owed the county sells the Tax Certificate Lien on the property
that has delinquent taxes on it to an Investor.
If the Real Estate Property Owner pays the back taxes owed (Including Interest & Penalties) to
the County or Taxing District, the Investor is notified and has to return the tax certificate. When the county or
taxing district receives the tax lien Certificate, the Investor is paid the amount of the certificate, plus accrued
interest.
In the meantime, the county or taxing district has had use of the money it was owed (the amount the
investor paid) needed to run the government.
With tax deeds the process begins when a real estate property owner lets their taxes on their real
estate go unpaid. The county then auctions the property to the winning bidder (remember that state laws
differ).
Scenario A: The county auctions the deed to the property, the sale of the property is final and the
winning bidder receives a Treasurer’s Deed or similar Deed to the real estate property. Scenario B: The county
auctions the Deed to the property, the Deed is encumbered or restricted by a “Right of Redemption” or “Waiting
Period” meaning the property owner can pay the delinquent tax and penalty and still maintain ownership. Penalties
can be as high as 20% in Georgia and 25% in Texas.
Once the redemption or “Waiting Period” has passed, i.e. 12 months in Georgia and 180 days in
Texas, the winning bidder Forecloses out the “Right of Redemption” and becomes the new owner of the real
estate.
or
If the property owner pays up on the delinquent taxes and penalties within the statute mandated
“Redemption Period” they maintain ownership of the real estate.
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