Tax Lien Investing: Glossary

This glossary provides definitions and explanations of key terms and concepts related to tax lien and tax deed investing. It's designed to help readers better understand the technical language and jargon used throughout this white paper and in the field of real estate investment more broadly.

Tax Lien: A legal claim by a government on a property for unpaid property taxes.

Tax Lien Certificate: A certificate issued to an investor who pays the tax debt of a property, allowing them to collect the debt plus interest from the property owner.

Redemption Period: The time allotted for the original property owner to repay the owed amount on a tax lien or deed.

Tax Deed: A legal document conveying property ownership, issued when a tax lien is not redeemed.

Foreclosure: A legal process where the holder of a tax lien certificate can claim ownership of the property if the lien is not redeemed.

Premium Bidding: A bidding method in tax lien auctions where investors bid an amount above the tax debt.

Bid Down the Interest: An auction method where investors bid on the lowest interest rate they will accept on a tax lien.

Redeemable Tax Deed: A tax deed that includes a redemption period for the original owner to reclaim the property.

Due Diligence: Research and analysis conducted before an investment to assess its value and risks.

Liquidity: The ease with which an investment can be converted into cash.

Market Value: The estimated selling price of a property in a fair market transaction.

Encumbrance: A claim or liability against a property, such as a mortgage or lien.

Collusion: Illegal cooperation or conspiracy, especially in order to cheat or deceive others.

Assessed Value: The value assigned to a property by a public tax assessor for taxation purposes.

Subsequent Taxes: Additional taxes that a tax lien holder may pay on a property to protect their investment.

Over-the-Counter (OTC) Sales: Tax liens or deeds available for purchase directly from the county or municipality after an auction.

Quiet Title Action: A legal action to establish a party's title to real property against anyone and everyone, and thus "quiet" any challenges or claims to the title.

Lien Priority: The order in which liens are paid off from the proceeds of a property sale, typically with tax liens having high priority.

Real Estate Owned (REO): Property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction.

Egress: A means of exit from a property.

Ingress: A means of entry to a property.

Zoning Laws: Regulations governing the use of land and structures built upon it.

Easement: A right to cross or otherwise use someone else's land for a specified purpose.

Accelerated Sale: A tax lien sale for the current year's taxes rather than previous year's taxes.

Affidavit: A sworn written statement used in various situations in tax lien investing.

Assignment: Transfer of a tax lien certificate or tax deed from one individual or entity to another.

Bankruptcy: Legal action that affects the collection of debts, including tax liens.

Bidder Information Sheet: A form required by some tax collectors, especially in New Jersey.

Bidder Registration Form: A form some states require before permitting bidding at a sale.

Bring Down: An update to a title search.

Clean Title: Title to property that is free from any encumbrances, often not conveyed in tax deed sales.

Face Value: The total amount due for a lien, including interest, subsequent payments, and any fees.

Lien Holder: The individual or entity in whose name a lien is registered.

Open Taxes: Unpaid current taxes at the tine of a tax sale.

Premium: Additional amount paid in tax lien or deed sales, sometimes returned upon redemption.

Prior Lien Holder: An entity holding a previous tax lien on a property.

Realty Transfer Fee: Fee for filing a deed with the county clerk.

Recording or Filing Fee: Fee charged for registration of a lien or deed.

Redemption Penalty: Penalty assessed to the property owner upon redemption of the lien.

Sewer Lien: Lien for unpaid sewer taxes.

Special Assessments: Additional levies by the municipality, not extinguished by tax sales.

Utility Lien: Lien for unpaid utilities like water or electricity.

W-9 Form: Tax form for successful bidders at a tax lien sale.

Warranty Deed: Deed that conveys clear.