Missouri Tax Lien Certificates

[Mia Gregory]

I live in Missouri, and am looking to dabble in real estate.  In Missouri, they sell tax lien certificates.  So, when you buy the tax lien, you do not own the property.  There is a 1 year redemption period where the owner can pay their taxes.  If they don't repay their taxes, then you can go through the proper channels to acquire the property.  Can someone explain that process?  I believe it is suggested to run a title search prior to buying the tax lien certificate. What if the house/property has a mortgage lien on it as well?  How does all that work?  What percentage of the time do individuals pay their taxes in the 1 year period?  If I know that the individual who owned the house has passed away, is that a better tax lien to buy (or not)?  Please help a first timer who is just starting to learn about tax lien certificates and has a bit of interest.  Thanks!

[Chris B.]

The mortgage (and other lines) would likely be wiped out (but talk with a real estate lawyer or title company to be sure, I am not one) - which is why mortgage holders usually require an escrow account so they can pay the property taxes. The lender might also have a right of redemption, IIRC. But if it's been that long with unpaid taxes, and also has a mortgage, that might be a good time to ask "why?". Especially if no other investors have purchased the tax lien during that time - what do they know about this situation that kept them from getting it? Quite a few people make money at tax sales, but they do it with a lot of creativity and situational knowledge. You might be in an area with few investors, or there could be a deal-killing reason why it's still there. Good luck!