What is a Tax Lien?

When properties are auctioned, it is similar to a short term loan to the property owner.  This ensures that your schools, fire districts and metro districts receive their proper funding in a timely manner.  Purchasing delinquent tax liens at sale is a popular form of investment.  Here are some facts to help you understand what a tax lien sale investment is, and what it is not:
  • When you purchase a tax lien sale certificate on property, you become a lien holder on the property. In essence, you loan funds to the owner to pay taxes.
  • You purchase the tax lien, not the property. In Douglas County, eventual transfer of deed has occurred in less than 1 percent of all purchases.
  • Investing in tax liens through purchase at tax lien sale is just that — an investment. The purchase can be thought of in terms of a potentially long range C.D.
  • The State Banking Commission determines the rate of return. The annual interest rate is set at nine points above the federal discount rate as of Sept. 1.