What Exactly is a Tax Lien Certificate?
A tax lien certificate is something issued by the county when property owners do not pay their property taxes. These tax lien certificates are then usually sold at a public auction, typically held once a year in most counties. Also called tax lien sales, during these auctions interested investors can bid on the tax lien certificates.
If you win a bid on a tax lien certificate, you now have a legal claim to the tax debt. The certificate of purchase records the amount of money due to the investor should the property owner pay off the debt by redeeming the tax lien certificate.
If the owner of the property manages to pay off the debt, then the tax lien certificate holder gets the money they invested back, plus the added interest that has been accrued on the debt. Interest rates range from 8% to as high as 36% in some cases.
If the owner of the property is unable to pay off the debt, the property is forecloses upon, and the holder of the tax lien certificate often has the opportunity to buy the property for only the cost of the taxes, penalties and interest that are due.
The government auctions off the tax lien certificates because it is a way for them to guarantee that they will get the money for the taxes that are owed on a property. Another way they do this is through a deed sale. Different from a tax lien certificate, a deed sale gives the investor complete ownership of the property in question. This does not happen as often as tax lien certificates.
Many people consider tax lien certificate investing to be safe investment, since over 90% of property owners pay off their liens. Still, like any investment, you need to do your research before you jump in. A tax service can sometimes be useful in helping you navigate the world of tax lien certificate investing.
How to Find Out About County Tax Lien Filings
You may find it hard to get information online about county tax lien filings. That’s because there is no one place, especially online, where all counties in the different states report their county tax lien information to. Additionally, most counties don’t display their county tax lien information themselves, but rather send it in to the either the federal or state offices depending on the type of lien it is.
If you can’t find the information that you’re looking for regarding a specific county tax lien, you could try to find the information by looking up the Uniform Commercial Code (UCC) filings for that area. In many cases, UCC filings will contain the information you need on a county tax lien. UCCs are centrally filed at the State level, in most cases at the Secretary of State office. This began in July 2001 to eliminate dual filing at both the federal and state level, which had been happening about 20% of the time with county tax liens.
Unfortunately, there isn’t a universal system for displaying information about a county tax lien. How easy the information is to find depends on what your state has chosen to do. Many states, including Alabama, Alaska, Arizona, Arkansas, Connecticut, Florida, Georgia, Idaho, Indiana, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Tennessee, Utah, Vermont, Virginia, and Washington all offer online UCC/county tax lien searches.
In many cases, the states use the UCC system for federal tax liens, but not always. If you need information about both personal and corporate county tax liens, you need to make sure that each state database differentiates clearly between the two.
A tax service can sometimes help you find out information about a county tax lien. Check out the Tax Defense Network. They specialize in a variety of tax matters, and can help you track down information about the county tax lien you were interested in, if you can’t find the information online yourself.
