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Q: How can I learn more about investing in tax lien certificates?

A: You can sign up for my free e-course. I also recommend Tax Lien University, a course that includes 5 e-books and a video clip of an actual sale. If you are interested in investing in tax liens in New Jersey, I am currently writing an e-book that is specific to tax lien investing in New Jersey. You can send an e-mail to to be notified my book is completed. In the meantime you can e-mail me your questions and I will be glad to answer them. Also you can find links to order other good books about tax lien investing on this site's home page.

Q: I noticed there were prior liens on a few of the properties. Does this mean that the prior lien holder has first rights to bid on the tax lien?

A: No, the prior lien holder does not have first rights to bid on the property anyone at the sale can bid on the property. However, it is common courtesy to let the prior lien holder have it at the highest interest rate. Besides being proper tax lien adequate, it doesn't make sense to bid on a property with a prior lien. The prior lien holder, just like the owner of the property, can come and pay the amount due right after the sale. If you had bought the lien, and it is paid within 10 days of the sale, you will get nothing on your money, not even the redemption penalty. There is a section in the e-book that I am writing that covers this issue.

Q: All of the properties (but one) sold for a hefty premium. What I've gathered is that these people are willing to pay a premium with the hopes of foreclosing on the property.

A: The reason that investors are willing to pay premium is because once you are the lien holder you can now pay subsequent taxes and get interest on the subsequent taxes. The interest rate is 18% if the amount owed is over $1500.00 and 8% if the amount owed is less than $1500. This is also covered in my book.

Q: Where could I do due diligence on delinquent properties to see if this is a worthwhile risk?

A: You could drive by the property and see what it looks like. You could look on the tax map and see if there are any easements or rights of way. You could also look in the tax book for all the information that the tax collector has on the property, i.e., last sale and mortgage information. A step by step guide on due diligence for tax lien investing will be available on the web site shortly.

Q: You mentioned that if the property owner does not pay in five years, the property is foreclosed. I may have misunderstood. I understand the redemption period is 2 years, not to exceed 20 years. Is there an automatic forfeit of the property if no payment is made in 5 years?

A: The lien holder can start foreclosure proceedings 2 years after the lien is purchased. If the lien is not redeemed the premium is not returned regardless of weather the lien holder forecloses or not. In order for the premium to be returned to the lien holder the lien must be redeemed within 5 years. If the lien is not redeemed in 2 years, the lien holder should start foreclosure proceedings and will include the premium as his/her expenses for the property.

Q: If I am the lien holder, wouldn't I have to pay the property taxes on this property during the redemption period?

A: Yes, as the lien holder you should pay the subsequent taxes, or the property will be in next years sale if the owner doesn't pay them. The owner can pay them even if he/she doesn't redeem your lien, this is not a very good position to be in, especially if you paid premium for the lien. It's best to pay the subsequent taxes as soon as you are able to.

Q: Would the township take subsequent payments from any premium paid?

A: No, the municipality will not take your subsequent tax payments from the premium paid. You will have to send in a check for subsequent taxes along with an affidavit stating what you have paid. The last lesson in the e-course, Protecting Your Investment, covers this as does my book. There will also be a sample affidavit in my e-book.

Q: Being new to the area, I chose to start here because this is where I live. I see that many people also find it desirable! Where do you suggest I start to look to purchase liens that are not selling at premiums or are leftover? I have some places in mind, but am interested in your opinion.

A: I believe in investing in what you know. I would start in areas that I am familiar with. That can be difficult if you're new to the area. If you have any family or friends that are familiar with a particular municipality than maybe they could help you out. Get familiar with the area where you live and where you work. Every municipality has its desirable and not so desirable areas that you may not be aware of unless you know the area. West Orange is a good example, like a lot of municipalities in New Jersey, it is spread out and property values vary widely.


Tax Lien Consulting LLC

The information provided on this web site is for education purposes only. It is meant as a guide to tax lien and tax deed investing. It does not take the place of accounting, legal or financial, or other advice. For advice in these areas you should seek the service of a professional.