Hidden Treasure in Liens

A lien certificate is the first lien on any real estate, which takes priority even over mortgages. When a property owner fails to pay his property taxes, the county government records a tax lien against the property. The county sells those tax liens as tax lien certificates to investors. When the property owner or the property owner’s lender eventually pays the property taxes, the county will redeem the tax lien certificate by sending the investor a check for the tax lien certificate purchase price plus 16 percent interest prorated on a monthly basis
If the property owner does not pay off his tax liens, the investor stands to gain even more. If the property tax liens are not paid off within three years, the investor has the right to foreclose on the tax lien and sell the property at a substantial profit through a judicial foreclosure.

Most counties sell the tax liens through tax lien auctions. Unfortunately, you missed the auction for Maricopa County on Feb. 1. But many counties including Maricopa County will still sell an investor the tax lien certificates that did not sell at auction by contacting the assessor’s office.

Buying a tax lien certificate as an investment could be safer than most other investments during our troubled economic times and should be profitable no matter the ultimate result. Some can be purchased for as low as a few hundred dollars. My father-in-law’s own father took advantage of buying tax lien certificates a few years ago and retired a millionaire.

Article published in the April 2011 Scottsdale Airpark News

Written by Attorney John Lohr, Jr., jll@hgplaw.com

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