What are Tax Lien Certificates and how do they work?

Question: What are tax lien certificates?

Response: Also referred to as TLCs, these financial instruments, which represent a property owner's unpaid taxes, are sold to investors, who in turn obtain the right to earn a higher rate of interest if the property owner pays off the debt and acquire a lien against the owner's property.  In case of non-payment of their taxes and interest when due, the owner of the tax lien certificates can take possession of the property.  Interest rates vary from state to state; they are generally in the range of 8% to 50%.  In some states, a fee or penalty is imposed for redemption of the tax lien regardless of when the latter is done.

Answered by Yara Zhakaria

Disclaimer: This site does not provide legal advice and users of this site should not interpret any of the information presented here as legal advice. The information provided merely conveys general information related to commonly asked legal questions. We are not a law firm and the employees responding to questions are not acting as your legal attorney. You should ultimately consult with a Lawyer for your case.