Likely Outcome For Tax Lien

[Aaron Millis]

For anyone who has experience with purchasing tax leans I am in the beginning stages of evaluating some from the local news paper. After digging I found that the current owners of the home are living in it as well. They are delinquent for 2015-2016 taxes, but they paid all their taxes from 2004-2014. I am just wondering what the common outcome of this might normally be? I assume that they must have a decent amount of equity, and would probably not want to lose their house..however I do not know their situation so its hard to predict the outcome. I know to plan for the scenario that you end up with the property, but I still would like to know how likely it would be in this instance. Thanks

[Keith Thompson]

@Aaron Millis - Hard to say - Generally it seems likely to redeem, but you can't know what their present circumstances are.

You correctly alluded to the famous caveat... Past performance is no guarantee of future returns...

While they paid in the past, something may have happened to change their capacity to continue that practice.  Or - there are others (Mtg Co. or other) that may have an interest in paying the taxes if the owner cannot.  That said, I suggest that you plan as though you will have to consummate the acquisition and be content with interest on the lien if that's the outcome. 

So, in the planning for acquisition, you would want to have sufficient funds available to finalize that course of action (i.e. lawyers, advertising, recordation, and other misc expenses).  If the interest rate is attractive (most are at least 6 times CD rates unless they've been bought down), and the property is worth acquiring it may be worth rolling the dice.

Good Luck!