Protecting Your Investment in Tax Deeds and Tax Lien Certificates

by Joanne Musa, The Tax Lien Lady

So you learned about how to buy a tax lien certificate or tax deed. You did your due diligence, prepared yourself to bid at the sale and you bought a tax lien certificate or tax deed. Now what do you do? Read on for information about the first step you need to take to ensure that your investment is profitable.

First of all, your lien or deed must be recorded in the county records, or it is worthless. In some states this is done for you and you pay a recording fee when you purchase your lien or deed at the sale. In most states, though, this is something that you will be responsible for and I suggest that you do it right away. You’ll have to wait until you have the deed or tax lien certificate, then you will have to send the original document, along with the recording fee, in to the proper office to be recorded with the county records. The required fee will vary depending on the state and county. You will need to call the recording office (usually the county clerk, or county recorder) and find out what the fee is so that you can send the exact amount in with the document. If you do not send the right payment your lien or deed may be returned to you without being recorded.

I suggest that you make a copy of the tax lien certificate or deed before you send it in to be recorded and that you send it via certified mail, with a return receipt. This way if your document is lost, you have proof that you sent it in to be recorded and you may be able to get it replaced. Also, the recording process can take some time, and if anything happens with the property in the meantime, you’ll have a copy of your document.

Once your document is recorded with the county, it will be sent back to you. Put it in a safe place. You will not be able to receive redemption of your tax lien certificate without providing the signed document to the tax collector. Do not sign it and turn it over to the tax collector until you are sure that the redemption amount is the amount that is due to you. To ensure that your tax payments, recording fees and other reimbursable expenses are accounted for, you will have to provide the tax collector with and affidavit for any payments that you make on your tax lien.

Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com.