A tax lien is a partial ownership interest in property associated with delinquent property tax payments. The lien is usually in the amount of delinquent taxes owed, plus other costs such as interest and sales fees. A tax lien sale occurs when the government sells the lien or liens to the public. These allow the government to collect money which will be used to make up for the unpaid property taxes.
Tax lien sales are one type of property tax sale. The other type of property tax sale is called a “tax deed sale.” This is where the actual property itself is sold. The title is then either passed on to the highest bidder or reverted back to the state if there is no buyer.
In the past, tax lien sales were conducted in person- people could attend a tax lien sale and purchase the liens. If there were people competing for the same lien, the highest bidder would usually prevail.
Currently, tax lien sales are increasingly being held online. This allows a greater pool of buyers to shop for and purchase tax lien sales. People from outside the local geographic region of the property can then obtain an ownership interest in the property. Once a person purchases a lien, they are called a “lienholder”. In some jurisdictions, a lienholder may become responsible for paying any further unpaid taxes on the property. If they fail to do so, they might lose their property rights.
Tax liens can sometimes be complicated and may involve many different persons and parties. They can sometimes be associated with specific legal disputes, such as:
- Conflicts regarding competition over bids
- Tax lien fraud, which is especially of concern with online tax lien transactions
- Redemption rights
Many disputes can be avoided or resolved through proper counseling and guidance from a financial advisor or legal professional. Issues like tax lien fraud can be avoided by working only with reputable agencies and companies, and avoiding any suspicions lien documents.
Some tax lien conflicts may require legal proceedings or a civil lawsuit to be fully resolved. This may result in a damages award or other remedies for losses caused by a violation.
Tax lien sales have many different steps and aspects to them. You may need to hire a real estate attorney in your area if you need assistance with a tax lien sale. Your attorney can provide you with legal advice and representation with any property tax issues or with a tax lien. State laws may vary, but your lawyer can help research the laws so that you know what your rights are. Also, if you need to file a lawsuit for damages, your lawyer can provide you with representation in a court of law.