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Lawyers of the OT - explain this tax lien auction to me like I’m 5
Posted on 3/14/26 at 8:24 pm
Posted on 3/14/26 at 8:24 pm
So I am paying off the taxes and bidding an interest rate? Here are the rules -
“You are not purchasing the property but a tax lien against the property in the amount of all taxes, interest, penalties, fees, and cost due on the property, origination cost, auction fee, and certificate fee. Your Certificate of Purchase will entitle you to first right of refusal to purchase the lien at the same interest rate on the property the next year if the property comes delinquent. Interest continues until the lien is redeemed or a foreclosure action results. You are advised to investigate, prior to purchasing, to determine whether the property would be of sufficient use or value to you should you be fortunate or unfortunate enough to be in a position to obtain a deed at some future date.
In the event of bankruptcy proceedings subsequent to the sale of the lien, there is no guarantee that the purchaser of the tax lien will receive the anticipated interest or any interest whatsoever, which determination will be made by the United States Bankruptcy Court.
If it is determined that the tax lien for which you have submitted payment is unavailable for any reason, your payment will be refunded to you without interest.
Interest stops on the day of redemption.”
“ Bids are awarded on the lowest interest rate bid.
1. The maximum bid is 12% simple interest per annum prorated monthly. The lowest acceptable bid is 0% per annum.
2. The bid will determine the rate of interest to be paid on the Certificate of Purchase, representing the amount of taxes, interest, fees, penalties, and cost associated with the parcel as of the day of auction.”
This nice little property is on the auction list. The back taxes are $40K
Old Zillow Listing for 22,516 SF House
Edit - added link to full rules
Full description of rules
“You are not purchasing the property but a tax lien against the property in the amount of all taxes, interest, penalties, fees, and cost due on the property, origination cost, auction fee, and certificate fee. Your Certificate of Purchase will entitle you to first right of refusal to purchase the lien at the same interest rate on the property the next year if the property comes delinquent. Interest continues until the lien is redeemed or a foreclosure action results. You are advised to investigate, prior to purchasing, to determine whether the property would be of sufficient use or value to you should you be fortunate or unfortunate enough to be in a position to obtain a deed at some future date.
In the event of bankruptcy proceedings subsequent to the sale of the lien, there is no guarantee that the purchaser of the tax lien will receive the anticipated interest or any interest whatsoever, which determination will be made by the United States Bankruptcy Court.
If it is determined that the tax lien for which you have submitted payment is unavailable for any reason, your payment will be refunded to you without interest.
Interest stops on the day of redemption.”
“ Bids are awarded on the lowest interest rate bid.
1. The maximum bid is 12% simple interest per annum prorated monthly. The lowest acceptable bid is 0% per annum.
2. The bid will determine the rate of interest to be paid on the Certificate of Purchase, representing the amount of taxes, interest, fees, penalties, and cost associated with the parcel as of the day of auction.”
This nice little property is on the auction list. The back taxes are $40K
Old Zillow Listing for 22,516 SF House
Edit - added link to full rules
Full description of rules
This post was edited on 3/14/26 at 8:53 pm
11
Posted on 3/14/26 at 8:27 pm to Ramblin Wreck
Back in the day you used to have to show up to the front steps of the courthouse at a certain time and day of the month and it was a whole live auction and shite.
That's all I got.
That's all I got.
Posted on 3/14/26 at 8:28 pm to Ramblin Wreck
This is why I didn't go to law school 
Posted on 3/14/26 at 8:30 pm to Ramblin Wreck
You are basically:
Paying someone’s property taxes
Charging interest
Using the property as collateral
If they don’t pay you back, you might eventually get the property.
Paying someone’s property taxes
Charging interest
Using the property as collateral
If they don’t pay you back, you might eventually get the property.
Posted on 3/14/26 at 8:31 pm to Ramblin Wreck
You earn interest on the lien. But it is auctioned to the highest Bidder, if/when it gets auctioned
Posted on 3/14/26 at 8:33 pm to TheOcean
So you're becoming a substitute agent for the County. They get the money, you get to hope they pay you back.
You'll never get the property.
Sounds awful.
You'll never get the property.
Sounds awful.
Posted on 3/14/26 at 8:36 pm to TheOcean
So I would be a lower interest rate for the delinquent tax property owner versus them paying the taxes on a credit card since the rate is capped at 12%? That could be a good deal for them. LOL
Posted on 3/14/26 at 8:39 pm to Ramblin Wreck
You bid to have the right to pay the taxes they didn’t pay, get a lien for taxes plus penalty fee, and also bid on the interest rate you will charge them (on the tax and penalty fee balance) until they satisfy your lien.
The person who bids the lower interest rate gets the lien.
The person who bids the lower interest rate gets the lien.
Posted on 3/14/26 at 8:41 pm to Ramblin Wreck
Why doesn’t Gordon put this on his billboards and leave our insurance rates alone?
Posted on 3/14/26 at 8:48 pm to Ramblin Wreck
You pay the taxes owed and can collect interest from the owner. If the owner cannot pay you the interest and principal in a certain time frame then you can own the property.
You aren’t guaranteed the interest payments if owner files bankruptcy and the court finds he cannot or doesn’t have to pay.
At least that’s my rudimentary understanding
You aren’t guaranteed the interest payments if owner files bankruptcy and the court finds he cannot or doesn’t have to pay.
At least that’s my rudimentary understanding
Posted on 3/14/26 at 8:49 pm to Dandaman
Well apparently Shelby County Alabama has terrible delinquent tax auction rules. Why would anyone bid on one of these? Is this the way most delinquent tax auctions are conducted now? I was actually looking for cheap land. Different county, but 64 wooded acres adjacent to my property sold at a tax auction for $3,000 without my knowledge about 7 years ago. Oddly enough a bank owned the property and never paid the taxes and lost it. I would have loved to had the opportunity to buy it.
Posted on 3/14/26 at 8:54 pm to MemphisGuy
quote:
If they don’t pay you back, you might eventually get the property.
This changed Jan. 1. You no longer get to own the property. You can force the sale but don’t get an interest in the property.
Posted on 3/14/26 at 9:57 pm to Ramblin Wreck
Think someone above answered the why. $$ Everyone who wins these bids never expect to actually get the property. They get the 12%.
Posted on 3/14/26 at 10:24 pm to secondandshort
quote:
This changed Jan. 1. You no longer get to own the property. You can force the sale but don’t get an interest in the property.
The frick? That eliminates the whole risk-reward of liens doesn't it? If the property never sells you won't get jack shite.
Posted on 3/14/26 at 10:56 pm to Blue Jay Friend
quote:
Back in the day you used to have to show up to the front steps of the courthouse at a certain time and day of the month and it was a whole live auction and shite.
I remember going down to the courthouse to pay a ticket on an auction day. There were a bunch of people waiting around for it to start sitting in lawn and or bag chairs.
Posted on 3/14/26 at 11:05 pm to Ramblin Wreck
Here we go again. Why TF are you asking a lawyer? Why do you people think they know everything about everything? They don’t. And most of them are alcoholic idiots.
A better person to ask would be somebody who invest in real estate, more specifically buys tax sales. I’ve bought dozens of tax sale properties but I don’t go to the auction because it’s a madhouse and you have to do a lot of research to know what you’re buying. I’d rather wait a month and pay someone 2-3 grand for their work. Then I quiet the title and it’s clear.
If you’re thinking about participating in a tax auction, and you’re this naive about it, stay away from it. Seriously, you are not ready to do it if this is your level of understanding. I tried to tell you.
A better person to ask would be somebody who invest in real estate, more specifically buys tax sales. I’ve bought dozens of tax sale properties but I don’t go to the auction because it’s a madhouse and you have to do a lot of research to know what you’re buying. I’d rather wait a month and pay someone 2-3 grand for their work. Then I quiet the title and it’s clear.
If you’re thinking about participating in a tax auction, and you’re this naive about it, stay away from it. Seriously, you are not ready to do it if this is your level of understanding. I tried to tell you.
This post was edited on 3/14/26 at 11:08 pm
Posted on 3/14/26 at 11:14 pm to Ramblin Wreck
quote:
So I would be a lower interest rate for the delinquent tax property owner versus them paying the taxes on a credit card since the rate is capped at 12%? That could be a good deal for them. LOL
I don’t know shite about shite but I would guess if they’re having problems like this, they probably don’t had any functional credit cards and can’t get any because their credit score is a dumpster fire.
Posted on 3/14/26 at 11:27 pm to Lou Loomis
Not all title insurance underwriters will consider this method free and clear if they didn’t give Mennonite notice.
Posted on 3/14/26 at 11:35 pm to forkedintheroad
quote:
If the property never sells you won't get jack shite.
It will sell at a Sheriff sale (if it goes that far) but now you only get what you paid plus penalty and interest. The owner who was delinquent gets the surplus.
Will be interesting to see how low people or consortiums will bid the interest.
This post was edited on 3/14/26 at 11:37 pm
Posted on 3/14/26 at 11:39 pm to MemphisGuy
quote:
Paying someone’s property taxes Charging interest Using the property as collateral If they don’t pay you back, you might eventually get the property.
Isn’t this basically the plot of Yellowstone 1923
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