Tax Foreclosures  -  Government Foreclosures                          
     
      This article is only intended as an introduction to tax foreclosures and the tax
      foreclosure process.   A tax foreclosure is a legal procedure used by government
      agencies to enforce a lien against a property for non-payment of income taxes or
      property taxes.  Government agencies hold tax foreclosures one to four times a
      year.  The IRS will sometimes place a tax lien on a home or other real property
      and sell it at an auction to recover the unpaid income taxes.  When a tax lien is
      put on a property, it takes priority over all other liens on the property.  State and
      local governments raise revenue via property taxes.  When property taxes become
      delinquent, an involuntary tax lien is placed on the property by the taxing authorities
      to recover the amount owed.  If the delinquent taxes are not paid within a
      predetermined time frame, the property is then sold at public auction. A minimum
      opening bid is required that covers the delinquent property tax amount,  legal costs,
    
 
      The highest bidder at the auction receives a tax sale certificate when he pays the
      bid amount.  The delinquent property owner can regain title to the property if
      they pay back the lien amount plus interest and miscellaneous expenses before
      a redemption period set by law expires. The redemption period can vary from
      several months to several years in some states. If the delinquent property owner
      exercises his right to redemption, they must pay an interest charge that can be
      fairly large on the amount paid at foreclosure by the purchaser.  Before you place
      a bid at a tax foreclosure, be sure you know how long the redemption period is.
      When the redemption period expires, the purchaser can petition the court to
      foreclose and remove the delinquent parties right of redemption.  When the tax
      foreclosure process is complete, the court issues a deed that conveys the property
      title to the purchaser.  If the bid amount was greater than the amount owed to the
      government, the excess amount will go to the next property lien holder or to the
      previous owner if there is no lien holder. 
 
      All liens on the foreclosed property are generally removed upon completion of the
      tax foreclosure process.  However, if a previous lien holder attempts to enforce their
      lien on a foreclosed property, it is the new owners responsibility to defend against
      their claim.  If there is a mortgage lien on a property, lenders will usually pay the taxes
      and add the amount to the property owner's mortgage to avoid foreclosure and
      protect their investment.  Many properties don't make it to the foreclosure process
      for this reason.
 
      If you intend to bid on a property at an auction, learn everything you can about the
      property.  Are there any other liens on the property?  How is the property zoned? 
      Can you build on the property, etc.?  You should be thoroughly aware of the risks
      and potential headaches involved with tax foreclosures and clearly understand what
      the delinquent parties legal rights are, specifically their redemption rights.  Be sure to
      rigorously study the tax foreclosure process before bidding.  In rare cases, you can
      gain title to a property for pennies on the dollar.