Tax liens are a higher priority than mortgages, therefore, if you foreclose on the lien at the end of the redemption period, you wouldn't have to pay off the mortgage, you would only have to notify the bank and all other lien holders of the foreclosure (see statute per state) before you will be able to foreclose and receive a tax deed (which will need to be cleaned by an attorney $1,000-$3,000).When you foreclose you will ONLY have to pay off the liens that are ahead of yours, as well as other tax liens purchased by other investors in subsequent years. ie. 2 year redemption period, you buy lien from 2010 due tax, and another investor buys 2011.

We came across a Statute here in Minnesota that affects our duplexes we own in our portfolio.

@Richard Heine the proper procedure is going to be very dependent on your state statutes on how to do this. 

If the claimant doesn't, then the owner has the right to petition the court to get the stale lien removed if he refuses to do so and per statute,  can recover a judgment for attorneys fees and costs incurred in getting it removed, regardless of the merits of the underlying claim.

dmj4Because each lender seems to have their own magic words there is no "one size fits all" formula that I am aware of.However, what you want is clear unequivocal language that they will not pursue a deficiency and that this is a part of the short sale bargain that you have struck.Also beware of the following which I picked up from one of our local "mills" that handles a lot of short sales.When you get your settlement agreement keep it close to you until the statute of limitations has run on the lender's ability to pursue you.

By statute, the attorney can't do anything until they are 30 days late anyway.

Gotta love MA land court - it writes it's own statutes. 

@Uzair Syed, Since 1031 is a federal statute it's practiced the same in every state. 

Your going to want to look up the statutes in regards to Limited Partnership's.

An investment opportunity available to those who want to learn and participate with all of the states, rules and statutes, redemption periods, interest rates, etc.