Tax Liens 101 - How to Profit from Delinquencies by Saen Higgins

Most people don’t lose their primary residence for a couple hundred, or even a couple thousand dollars in back taxes. The vast majority of tax lien certificates on primary residences do redeem, which insures the 18%, or 25%, or 36% interest to the investor.

Tax Lien Certificates – Can you really get properties for a fraction of their value by investing in a tax lien certificate? The typical single-family residential home that doesn’t redeem is usually some sort of rental property, many times with an out-of-state or absentee owner. Tens of thousands of these types of properties get acquired through the tax lien certificate process every year.

Due to the most recent economic downturn, and the sub-prime mortgage crisis, we’ve also seen an extraordinary number of property taxes remaining delinquent due to the fact that the mortgage balance is more than the property is worth. With bank-owned properties at record highs, we’ve seen a higher-than-usual number of beautiful properties (both residential and commercial) being acquired through the tax lien certificate process.

Tax Lien Certificates – Why wouldn’t the bank pay off the delinquent property taxes? If there’s a bank mortgage on the property, and the property is being foreclosed on for delinquent property taxes, in most cases the bank will step in and pay the back taxes to protect their position, which insures the tax lien certificate investor will receive their 18%, or 25%, or 36% interest.

Although it’s impossible to know exactly why a property is lost to tax sale, here are some factors to consider when it comes to banks:

  • According to the U.S. Census Bureau, 40% of homes in America do not have a mortgage, therefore there’s no bank to step in.
  • 297 banks failed in the 2-year period from 2009 – 2010, which is more bank failings than the previous 17 years combined (source: FDIC). What happened to all of the mortgages and bank owned properties from these 297 banks? Who’s paying the property taxes? Who should the county notify regarding delinquent property taxes?
  • Foreclosures and bank-owned property inventories have been at record highs for several years now. Are the banks staying current on all of the delinquent property tax bills? Some yes, some no.
  • Mortgage companies packaged up countless thousands of mortgages and sold them to “Wall Street.” Wall Street packaged up loans and sold them to foreign investors. Who owns the mortgage now? Do they know when a property is being lost for delinquent property taxes?
  • Some banks are just poorly run, and have horrendous record keeping. Look at the rate at which they’re failing. These are just a few of the logical factors as they pertain to banks. I’m confident there are several more reasons why banks fail to pay delinquent property taxes, and hence lose very nice properties to tax sale.

Saen Higgins

Saen Higgins is the Co-Founder of US Tax Lien Association. He is one of the world’s foremost authorities on the subject of investing in Tax Lien Certificates and Tax Foreclosed Properties. He has been training and speaking internationally for over 25 years. Saen is passionate about sharing his philosophies on real estate investment and creating financial freedom. His extensive knowledge in the field of self-directed retirement accounts has changed the quality of life for thousands and the way they invest. Saen’s devotion to helping people creates true financial independence and is only matched by his business partner, Tony Martinez.


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645 Church St, Bound Brook, NJ

2683 sq. ft.
14,810 sq. ft.


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