What is the difference between a tax lien and a tax deed?
A tax lien is a debt or encumberance against a property for failure to pay taxes. An investor may purchase a tax lien certificate and pay the local government its taxes allowing the county, city and school districts to continue operating. In exchange, the investor will earn a fee or interest rate on the amount of money invested. The fee is ultimately paid by the property owner or other business with an interest in the property. In the event that a tax lien debt is not paid within the prescibed amount of time, the investor may foreclose on the property and take ownership. Each state is different in its methodology. A tax deed is actual ownership or title to a property. This happens either by an investor foreclosing on the property or by the local government, usually the county, foreclosing on the lien that they have placed on a property. About half of the States operate tax deed or tax foreclosure sales and sell the actual ownership rights to the property at auction. The minimum bid sta
