The History of Tax Foreclosures and Tax Liens

Taxes go back to the time of the Romans. And like them or hate them, municipal, State and Federal property taxes are a fact of life in a civil society. In fact, there has never been a civil society in the history of the world that didn’t have taxes. Why is that and what’s the relationship between the two?

Property taxes, though we may not like them, typically account for 90% of the funding for municipal services like road repair, education, fire protection and police services. In the towns in which we live – without a property tax base, your city or town will quickly fall into disrepair.

Home owners and property investors who don’t pay their taxes on time and in full find themselves in a situation where their ownership status goes into jeopardy. The first punishment for failure to pay taxes is the creation of a tax lien on the property by the municipality. This tax lien can be purchased by any one, any where.

Once a tax lien is owned by an investor, this investor can pursue the full tax amount owed plus an interest penalty from the property owner. If the owner can not or will not pay this amount, the home may be converted to a tax foreclosure property, where ownership of the property can be conveyed to the owner of the tax lien or to the highest bidder at a foreclosure auction.