There are times when a property owner is unable to pay the required property tax. At such a time they become a delinquent taxpayer and the appropriate governing authority is in charge for collecting property taxes. This collection can be achieved by a tax auction. That brings us to the question What is a Tax Lien auction? A Tax Lien auction is a court-ordered auction. Depending upon the state and the nature of sales it can be an auction for tax deed sales or tax lien certificates.

In case of an auction for the tax deed, the property is sold to satisfy the existing delinquent taxes. An auction of the tax lien certificate involves selling a certificate to claim the total sum of taxes owed and any administrative charges and interest on the amount owed.

If you purchase a tax lien certificate, you are required to make the payment against the required property taxes for the delinquent taxpayer. In turn, the delinquent taxpayer is required to pay back the amount of the lien plus interest charges, usually 16-18%, to you. This allows you to have two options a higher percentage of interest in case the repayment is made, or the possibility of the deed of the concerned property if the delinquent taxpayer fail to repay.

A court-appointed referee carries out the auction. At the beginning of the auction, the referee announce the terms of the sale, the required deposit to be made at the auction. Usually, you are required to pay 10% in form of a certified check which are payable to the referee.

Remember, the properties sold in these auctions are sold "AS IS, WHERE IS, WITH ALL FAULTS." Even if a property is under a tax lien foreclosure, you do not get right to enter the property for an inspection. You are required to place your bid accounting this uncertainty. You should investigate the property as best you can, but you cannot inspect the interior prior to the sale.

Tax Liens provides detailed information about tax liens, government tax liens, tax lien auctions, and more. Tax Liens is affiliated with Tax Attorneys In California.