Tax liens may be imposed on property for the purpose of collecting outstanding debt on the property. The lien usually allows the lien holder to obtain ownership interests in a house or other type of property. Tax liens are generally obtained through a public auction conducted by a local government body. 

Depending on the circumstances, a tax lien may:

  • Allow the tax lien holder to collect unpaid taxes or penalty fees associated with the property
  • Lead to a foreclosure proceeding, with the tax lien holder obtaining title to the property
  • Lead to a tax deed sale, with the lien holder obtaining first bid rights on the property

Tax liens are usually purchased by investors, real estate companies, and various financial institutions.  

What Is a Tax Lien Purchase?

In general, tax liens are applied to a piece of real estate property. Thus, a tax lien purchase usually refers to instances where outstanding property tax debt has led to a foreclosure on the home. In such cases, the tax lien may be lead to the purchase of the entire home.  That is, an investor who holds a tax lien may ultimately become the owner of the home, especially if the court grants them a quitclaim deed to the home. 

Tax lien purchases can often be inviting to investors, who may obtain favorable tax rates and interest rates on the house. Tax lien investments typically yield a higher rate of return than other types of real estate investments. Also, a tax lien usually has priority even over mortgages in terms of the type of debt that the property owner needs to repay immediately. 

Can a Tax Lien Purchase Be Disputed?

Legal disputes over tax lien purchases can arise for a number of different reasons. For instance, there may be some dispute over the sales contract terms, the price, or the parties eligible for purchasing the property.

Another issue is where the government body has actually issued the tax lien certificate in error.  For instance, a wrong reading of tax documents may actually result in a tax lien being imposed, when in fact it shouldn’t have been.  In such cases, it may be possible for the property owner to appeal or challenge the government’s conclusions. 

Do I Need a Lawyer for Assistance with a Tax Lien Purchase?

Tax lien purchases can sometimes involve multiple parties, including the property owner, various investors, and government representatives.  You may wish to hire a qualified real estate lawyer in your area if you need help with a tax lien purchase.  Your lawyer can provide you with legal guidance and representation so that your interests are protected during the proceedings. Also, your attorney can assist you in the event that you need to file a lawsuit over a tax lien dispute.