Purchasing Left Over Tax Lien Certificates and Tax Deeds

I get a lot of questions from subscribers to taxlienlady.com that want to know how they can purchase tax liens or tax deeds through the mail. They specifically want to know about left over tax liens and tax deeds. These are tax lien certificates or tax deeds that are “left-over” from the tax sale. In other words no one bid at them at the sale and they were struck of to the county, state, or municipality. In most states if the delinquent tax property is not sold at the tax sale, it is struck of to the county or municipality. A few states allow the assignment of tax lien certificates or tax deeds to investors. There are pros and cons to purchasing leftover or assignment liens or deeds from the county.

On the positive side, there is no competition; you don’t have to bid against other investors. For liens and redeemable deeds, you may be able to purchase a lien or deed in which the redemption period has already ended, or is close to being over, in which case you may wind up with the property. For some deed states, since the county, state, or municipality has already taken title to the property, you may not have to go through a title clearing process (quiet title or title certification process). You’ll have to check with the county to find this out.

On the negative side, leftovers are usually not worth bidding on in the first place and that’s why they were not sold at the sale. In smaller counties, and in states where the tax sales are conducted by the municipality (New Jersey, and the New England states) there is usually nothing worthwhile that is left over. To find leftover tax liens or deeds, you have to go to counties that have very large lists (a few thousand properties) to begin with. And you’ll have to sift through a lot of junk to find good properties.

Sometimes you can find a nugget of gold in the leftover tax sale list. I know a couple of tax lien investors in Arizona who do this regularly as well as a couple of tax deed investors (in Texas and Pennsylvania) who have done this. With more and more people becoming interested in tax lien and tax deed investing and going to the auctions, there are less leftovers available than there used to be. My advice is to use extreme caution and be extremely rigorous with your due diligence when purchasing leftover liens or deeds. I also believe that investing long distance in leftover liens or deeds is a mistake if you do not have someone that can physically look at the property for you.

If you would like to find out more about how to find that nugget of gold in the leftover tax sale list, this is the topic of Tax Lien Lady’s next teleseminar interview with Brendan Monahan of Arizona Tax Liens on March 15, 2007. To register for the teleseminar at no charge go to http://tinyurl.com/f2hy4.