Wednesday, October 22, 2008

What is a Tax Lien Certificate?

My friend asked me today what a tax lien certificate was, and I had no idea, so I decided to Google it. According to Investopedia, a tax lien certificate is: "A certificate of claim against property that has a lien placed upon it as a result of unpaid property taxes." Investopedia also said that: Tax lien certificates are "available in many states, this certificate allows the owner to collect unpaid taxes in addition to a set level of interest. These investments are not insured or necessarily backed by property, and therefore great risks are involved with each purchase."
Another site stated that: "Individuals have been snapping up tax liens more and more because of these two benefits. A fixed percentage rate, mandated by a government agency, or the title to property at a substantial discount are incredible benefits rarely seen with other real estate transactions."

They seem a bit risky, but I've learned something new today...

Is anyone else familiar with these types of investments?