Newest Strategies Reveal How Tax Liens Take Priority Over Other Financial Encumbrances On Property

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A tax lien sets aside mortgages, liens and other financial encumbrances on property. The new strategies revealed enable the lien holder greater control in the tumultuous investment environment.

Buying the tax lien certificate at a tax lien auction puts you at the head of the queue to be paid if the tax defaulted property is then sold at a tax deed auction.

In most cases, the real property tax is superior to all other liens and financial encumbrances on real estate in all 50 states.

This means the property tax debt must be paid off before anything else, said Ted Thomas, an expert in investing in tax lien certificates and mortgage free tax deeds.

He provided this example:

A property owner has a mortgage and does some home repair. The owner then gets into a financial bind and cannot pay the property taxes, the mortgage and the bill to the construction company.

“The mortgage is already recorded as a financial lien on the property. The construction company can file a workman’s lien against the property. This is a second debt on the property,” Mr. Thomas said.

When the property taxes go unpaid and become past due, the government then files a tax lien against the property. Because this is a government lien, usually this encumbrance goes immediately to the top of the list. The mortgage and the construction company claims are not eliminated, but are subservient to the property tax claim.

“Buying the tax lien certificate at a tax lien auction puts you at the head of the queue to be paid if the tax defaulted property is then sold at a tax deed auction,” Mr. Thomas explained. “The property simply cannot be sold for less than what’s owed on the taxes, plus the interest and fees, but it could be sold for more.”

He gave this further example. A house has a $5,000 tax lien recorded against it and the tax lien certificate is purchased at a tax lien auction for $5,000. The certificate holder earns $2,000 interest on the certificate, for a total owed of $7,000 at the time the property goes to a tax deed auction.

The mortgage on the same property is $100,000.

The contractor’s lien against the property is $10,000.

The tax defaulted property is then sold for $100,000 at a tax deed auction.

“In the case where the certificate holder doesn’t receive the property when it goes to a tax deed sale, the first debt to be paid is to the person holding the tax lien certificate. The certificate holder gets their $5,000 investment back plus $2,000 as a return on investment,” Mr. Thomas said. “The mortgage holder gets $93,000. The mortgage company loses $7,000 because the tax lien certificate takes priority. The construction company gets nothing and has no recourse to get their money, unless they sue the homeowner directly in court. The construction company cannot place a lien on the property again.”

Mr. Thomas said this example shows how safe and predictable such investing can be. You either get paid or you get the property.

Ted has developed in-depth training programs that show you step-by-step how to profit from tax lien certificates and tax deeds. Don’t miss his must-see video, “Truth About Tax Liens Certificate” at his website

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