Tax Foreclosure Sales

County Tax Deed Sales

A County Tax Deed Sale refers to the forced sale of real estate on account of the property ownerís failure to pay taxes to the county government. In many states, this sale follows a Tax Lien Sale on the same property. A tax lien is an amount that covers unpaid property taxes and all other costs arising on account of the legal process involved in reclaiming those unpaid taxes. If the owner of the property does not pay the dues within the specified time period after being notified, the county government possesses the right to sell what is known as a tax lien certificate to interested investors over that property. If the property owner is unable to redeem the tax lien certificate by paying back the dues, the investor may then request the county government to proceed with a county tax deed sale to recover the amount paid by the investor along with the accrued interest.

The interest that the tax lien earns over this period of time is the primary reason that many investors come forward to purchase a tax lien certificate. The rate of interest on tax liens varies from ten to about twenty four percent per annum. Since these interest rates are quite attractive, many investors find this kind of investment highly lucrative. Moreover when investors purchase the tax lien certificates, the county government effectively gets back its share of the delinquent taxes which are extremely important in keeping the government functioning efficiently. The property owner also gets a little time to pay back the dues.

However, if and when the owner is not able to redeem the tax lien certificate, the investor can request the government to initiate the necessary process to auction the property. In some states, the property is offered to the investor who holds the tax lien certificate. In other states, the property is sold at an auction and the proceeds from the county tax deed sales are used to pay back the investor his dues. Some counties also allow the original owner to redeem his property within a specified period of time after the sale has taken place. For this reason, purchasers of property at county tax deed sales are cautioned not to make extensive improvements to the newly acquired property until the redemption period expires.

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