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Real Estate Property Tax Lien Investing Caution
Gather around children for a tale of royal power. Far back in
history the king owned everything. (Does that remind you of
Donald Trump?). Occasionally the king would grant property to a
duke. Property ownership meant wealth, so the king would demand
that the duke pay yearly taxes. To this very day much of the
money that supports government comes from property taxes, for
you see children, government is still king.
If the property owner fails to pay the tax the county government
places a lien on that property. Every year property tax liens
are sold at auction to the highest bidder. If the property owner
fails to satisfy that tax lien the new owner of the lien can
begin foreclosure and acquire the property. That seldom happens,
but it is possible. Usually the liens are redeemed (paid) before
the time limit expires.
You've probably seen the TV infomercial extolling the benefits
of buying property tax liens. It's true, property tax liens
usually pay an above average rate of interest (it varies from
state to state) and the lien is secured by some kind of real
estate. Because of the infomercial and real estate seminars, tax
lien investing has became very popular. There was a time in some
counties when few people would show up at the property tax lien
auction. These days the seminar gurus often arrive with bus
loads of students ready to bid.
A good investment, yes, but there are some surprises for the
uninformed. Because
property tax sales occur each year, there
may be liens on the same property, for different tax years held
by different investors. Like this... Bill bought the 1980 lien;
Hillary bought the 1981 lien and George was the successful
bidder the next year when the 1982 liens were offered.
Here in Arizona the law is very clear that tax liens for
different tax years held by different private parties have
parity among themselves. So if the redemption period for Bill's
1980 tax lien had expired without being paid he could foreclose
on the property, but his foreclosure would not wipeout the liens
held by Hillary and George. Bill might have a right to the
property, but he could not get clear title until he pays off
Hillary and George.
If Hillary and George had been influenced by that infomercial
and thought that they could scoop up ownership of property for
the simple price of a tax lien, well they are more than a little
disappointed.
Oh, there could be one more surprise. Sometimes the state owns
tax liens. When the state government forecloses all other
privately held property tax liens are turned into waste paper.
Property tax liens certainly can be a good investment if you
always keep one fact one mind... You are the duke and the
government is the king!
About the author:
Markk Walters is an investor and manager of the Real Estate
Investor Base Camp at http://www.CashFlowInstitute.com
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Investing: Stock Quotes, Charts & Market News - MSN Money |
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en.wikipedia.org |
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Information about bond investing from The Bond Market Association. Bond price information, articles, introductory guides, and links to related sites. |
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Welcome to Investing For Kids. This Web site is designed by kids for kids. It examines stocks, bonds, ... It teaches the principles of saving and investing. ... |
library.thinkquest.org |
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internet.com - the Internet and IT Network from Jupitermedia Corp. |
The definitive internet resource. |
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Welcome to the Investing Online Resource Center! |
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Investing for Your Future |
Online course for beginner investors. Course and program description, registration, resources, feedback and contacts. |
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Business, technology, real estate and investing news, primarily from The Baltimore Sun. |
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Investing for beginners gives new investors articles on the stock market,interviews with leading financial experts, discussion boards, a free weekly ... |
beginnersinvest.about.com |
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