What is a Tax Lien?
A tax lien is a legal claim placed on a property when the owner fails to pay property taxes. When a property owner doesn't pay their taxes, the local government can place a lien on the property.
The government can then sell the tax lien certificate to investors in an auction, which gives the investor the right to collect the unpaid taxes plus interest. The property owner must pay off the lien (including interest and penalties) to clear it and avoid foreclosure.
If the property owner doesn't pay off the lien within a specific period (the redemption period), the investor can take legal steps to foreclose on the property and potentially take ownership.