What risks do lien investors face?
Some of the risks include Bankruptcy delays; Damage or destruction of the property; Environmental contamination; Valuation of the underlying property; Foreclosure by a subsequent tax lien holder; Loss of premium if foreclosure is not completed within five years; and Morality issues relating to foreclosing on someone’s home. • Can a tax lien be discharged in Bankruptcy? No, but an ‘Automatic Stay’ applies as soon as a bankruptcy petition is filed, so the foreclosure proceedings must stop until a Court Order is obtained allowing for the foreclosure to continue. • Can I stop subsequent tax lien holders from foreclosing on me? Subsequent (newer) tax liens have priority over prior (older) tax liens. The holder of a prior tax lien can pay off the subsequent lien and have the cost added to its tax lien. The only limitation on this rule is that anyone who acquires an interest in property for ‘nominal consideration’ is not permitted to redeem subsequent tax liens. This is designed to stop title
