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.