Tax Lien FAQs

Tax lien certificates, variously known as tax executions, certificates of purchase, and tax sale certificates, are instruments offered for sale by local county and municipal governments as a method of recovering property tax dollars deemed delinquent due to the property owner’s failure to satisfy the debt. The issuance of tax certificates to investors is typically done in an auction setting where the successful bidder is determined by the lowest interest rate declared or the highest bid for cash.

Tax certificates are not risk-free investments. Bankruptcy, litigation, and certificates declared invalid due to procedural errors are all factors that may impact any investor’s portfolio. There is also the risk that the tax lien will not be redeemed by the property owner.

They earn interest and penalties provided by the law for every month taxes are unpaid. The investment is secured by lien on real property.

Tax lien certificates are purchased in county or municipality auctions (called the primary market) or from other investors via brokers (called the secondary market). Auction dates differ by state and county; the secondary market is only available through brokers, like Lumentum.

While distressed real estate data is available directly from counties and municipalities, it is extremely difficult to manage it without a dedicated solution. Lumentum’s DigiPan platform, for instance, can automatically import curated, normalized data as soon as it’s available, and allow investors to sort and filter based on 50 discrete fields.

You can register for free guest access to DigiPan here. This includes secondary market data and basic information on county and municipality auctions across a number of states. Individual county or municipality data can be purchased at any time for immediate import into DigiPan.