Advice and Tips for Investing in Tax Lien Foreclosures

Tax lien foreclosures are sales of properties that are foreclosed upon by the government as a result of unpaid property taxes, unpaid personal income taxes, or other forms of tax liens against a property.  The properties are offered for sale to the general public at foreclosure auctions conducted by the government (counties, municipalities, states and the IRS).  Investors/buyers have the opportunity to purchase these properties for pennies on the dollar.

Unpaid Property Tax Foreclosure Auctions

Selling the unpaid property tax foreclosure properties at auctions is a way for counties and municipalities to generate revenue for public services such as police, fire and schools. Since the government conducts these auctions, they are conducted in a safe and lawful manner. Each county will publish their tax deed sale dates and information generally in a local newspaper in the county where the property is located. You can also contact your local county tax office and get information from them. The auctions are held either at the local county courthouse or at the property site and are sold for the amount of the back taxes, interest, fees and any court costs.

A list of IRS tax lien foreclosures available for purchase can be found on their website at http://www.treas.gov/auctions/irs/cat_Real7.htm.

Tips for Investing in Tax Lien Foreclosures

Before you decide to bid on any tax foreclosures, you should do your due diligence first by researching the property value and the neighborhood demographics.  This can be done several ways:

1.  Checking with a local Realtor
2.  Internet sites.   
3.  County recorder’s office or tax appraiser’s office

Why retaining Legal Advice from an Attorney is Important

Every state has different laws on tax lien foreclosures and auction sale procedures. It is recommended that you consult with a real estate lawyer to help you investigate the laws in your state. The lawyer can explain to you the tax lien foreclosure auction procedures and the risks associated with purchasing tax lien foreclosures. Such risks include a statutory redemption period in which the property owner can redeem the property. There may be other liens and encumbrances on the property or use restrictions. Your lawyer can research this information for you as well as conduct a title search on the property. This way you can make an intelligent decision if you wish to purchase a tax lien foreclosure property.