Tax Lien Certificates: What are they?

Tax lien certificates are pieces of legal and binding documents that are specific to real estate. These are given to a person who pays the taxes of a piece of property in lieu of the original and current owner of the land. Tax liens are obligatory taxes that each and every owner should pay. These taxes are given to the owners each year, when these are paid on time; these are removed from the land and will then be given again next year. In the event that the proprietor of the land could not meet the payment, the part of the government that issues these liens will allow other individuals to invest into these lands and pay in behalf of the owners. Only one person can invest in each piece of property. Persons who pay on behalf of the current owners are then issued tax lien certificates as proof of their investment.

Redeeming the Investment

There are two outcomes of having these certifications. These may be considered a win win situation for the investor because the first outcome is that the owner of the land will pay the necessary taxes needed to claim the certification and lay claim to the lot again. The process would be to pay the government and the government will contact the investor to ask for the paper certifying ownership of the lien. The actual amount will be generated by the government with the appropriate interest for the land. The annualized return can reach up to fifty percent depending on many different factors that affect real estate.

The second outcome is that the person, establishment or company that paid the taxes on behalf of the current owner may actually be able to claim the property, through a foreclosure process. Tax lien certificates can be a very sound investment for those with the money to spare because in the event of a foreclosure, land property taxes are usually the firs to be paid.

Checking for Unpaid Dues

When an individual is interested in certain pieces of land, it is worthwhile to check and see if there is a possibility of getting tax lien certificates for these. Not only are they worth the return of the investment with a sizeable interest but the possibility of actually owning that lot is a very lucrative aspect. It is best to check for unpaid taxes while running a title report for the property.