A tax lien sale may be conducted by a local municipality or state government for the purposes of collecting outstanding property taxes on a piece of property. This typically applies to residential homes that have unpaid property taxes on them. If the property owner is unable to make up for the taxes, the government will then place a lien on the property. This lien may then be sold to the public through an auction. 

In some cases, the lien may allow an investor to collect on unpaid taxes or penalties associated with the property. In other cases, the tax lien may allow the investor to foreclose on the home and obtain title to the property. This may happen either through a direct acquisition by the investor (using a quitclaim deed), or through a tax deed sale by the government, with the tax lien holder having rights to first bids. 

Who Can Participate in a Tax Lien Sale?

Tax lien sales are usually conducted by the government and are open to the public through auction.  Investors are free to place their bid to purchase a tax lien. The term “investors” generally refers to persons or institutions that are interested in purchasing the foreclosed property, to be resold for a profit. These may include banks, real estate companies, and sometimes mortgage companies.  Individuals can also participate in tax lien sales. 

Are There Any Alternatives to Foreclosure?

As mentioned, a tax lien and a tax lien sale can often result in a foreclosure on the home in question. For the property owner, a tax lien foreclosure may be difficult to avoid or prevent. This is because, unlike a foreclosure by a mortgage company or bank, the tax lien foreclosure is typically overseen through the efforts of the state or through a local court system. As such, judicial decisions are rendered during the tax lien proceedings, which may be difficult to overturn.

However, there may be various foreclosure alternatives available to the property owner. For instance, in most tax lien sales, there is a “redemption period” allotted to the home owner. This is a set time period in which the homeowner can pay back the taxes owed if possible.  During the redemption period, any interested investors can’t foreclose on the property. Other alternatives may be available, depending on the real estate and tax laws in the area. 

Do I Need a Lawyer for Help Assistance With a Tax Lien Sale?

Tax lien sales can often be very complicated, and can involve many different overlapping legal concepts. You may need to hire a real estate lawyer if you need any type of assistance with a tax lien sale. Your attorney will be able to represent your interests during court hearings, and can inform you of your legal rights.  Also, in the event of a legal conflict or dispute, your lawyer can assist you with a lawsuit if necessary.