Real Estate Terms Dictionary

Tax Lien Sale Certificate

Definition of 'Tax Lien Sale Certificate'

A tax lien sale certificate is a document proving that the holder has purchased a property in a tax lien sale auction.

What is a Tax Lien Sale Certificate:

When a tax lien sale certificate is purchased at a public auction, the buyer then becomes a lien holder on that property. Buying a tax lien certificate does not automatically mean that the lien holder can use the property right away as the property owner still has a certain period of time to pay back due federal taxes.

When purchasing a tax lien certificate, the lien holder can expect certain guarantees; that is, to either receive an annual return of 16%, 18%, or up to 50% on the amount paid for the certificate until the term set for the owner to pay his or her debt expires or to become the owner of the property when it officially becomes a foreclosure.

Like any real estate investment opportunity, buying a tax lien certificate also involves a certain degree of risk. One risk is not being able to properly assess the value of the property and ending up with worthless real estate. Another is that the property owner might file for bankruptcy, meaning that the IRS might have a claim to the property and other liens might be placed on the same property.


Here's a real-life example from one of the properties researched on PropertyShark:

Tax lien sale certificate - example


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The glossary is intended to provide real estate professionals and home buyers with a basic understanding of various specialized terms related to legal rights over a property. All terms appear in public records such as ACRIS. We do not take responsibility for the legal accuracy of the definitions provided and ask that use of these explanations in a legal setting be made only after checking with a lawyer or another specialist in the field.