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The Benefits of Being a Tax Lien Certificate Owner

Posted on | March 17, 2011 | 4 Comments

Tax lien certificates are debt instruments and one of the many examples of cash flow notes. Procuring one of these notes, which can either be bought or sold, means that the debtor will automatically owe you the debt. Notes obtained from the real estate industry are among the most popular type of notes. Investors prefer to collect them in lump-sum rather than wait for monthly payments.

A lien on a property for not paying taxes is called a tax lien certificate. Owners of a real estate have financial obligations, or a tax lien, each year. To remove the tax lien, they would have to pay the property taxes on time. The county government will allow investors to pay on the owner’s behalf if the taxes are not paid. As proof of purchase, the winning bidder will receive a tax lien certificate at the public tax lien auction.

The investor or certificate owner may expect 2 outcomes:

1. He or she may become the owner of the real estate without the mortgages and mechanics lien or

2. Every year, they will have an annualized return of 16-50% on what they paid in order to obtain the tax lien certificate.

Being the owner of this certificate means sitting back and waiting. The property owner must visit the county tax collectors office when they decide to pay their tax obligation. Here, they will repay the amount you paid to get the certificate plus interest. You will be contacted by the government and asked to return the certificate. The government will then make a check in the amount you paid to get the certificate plus interest.

Tax lien certificates are a great investment for those who are investing in foreclosures. Remember that above everything else, property taxes get paid first. These taxes are even paid before mortgages. Because of this, investing in tax lien certificates is a safe investment. It may be a good idea to see if you can invest in the certificate when you come across a foreclosure and find unpaid property taxes. Tax liens are available in every county in the United States, the most popular being in Maricopa, Arizona.


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