Tax Liens: They Aren’t Always Bad

The word “tax” has managed to earn itself a very bad reputation. Ask people what they think of it, and approximately 8 out of 10 will give you negative feedback, and then enumerate reasons as to why they shouldn’t be paying such amounts in the first place. Despite the image it made for itself, there’s a particular “word” In which you can “add” to make it “desirable” – do you want to know what it is? Well if you added “liens” to “tax”, you get “tax liens”, which can be a good thing for you, depending on which end of the deal you’re at. nnBasically, these are demands from the government that you pay what is due, and are “slapped” in your face for not paying the taxes on your property. When that happens, like when you violate the terms and other things set by the government, you’re left with the probability of losing you’re property. Having said that, lots of bad thoughts are most likely running through your mind like “I thought that tax liens would be something good? I’ve read nothing good about it so far!” - well yeah, SO FAR it seems. Being a good or bad thing again depends on which end of the “deal” you are at; receiving a tax lien would be like “being at the wrong end of the bat”, while buying one would mean “you’re the one swinging the bat”. nnTo get a better picture on how it can be bad or good, take the following example: a guy receives a lien for having made several tax default payments. Once that happens, he’ll be stripped of his property ownership rights, which includes the right to use that certain property as collateral for availing a secured loan. He also faces the possibility of being charged with interest and penalties, as well as losing his property (as mentioned earlier). That’d suck big time, which means the poor fellow found himself at the wrong end of the bat, which equates to the statement “tax liens are awful”. nnNow, there’s another guy that comes into the picture. His story starts based on the following fact: in some states, they actually allow the tax lien to be turned into a first lien on the property. What that means is it’ll be available for auctioning as a tax lien certificate. This is when the 2nd fellow comes into the picture. If he out bids the others and gets his hands on the certificate, he’ll be able to enjoy the interest and penalties that the first individual has to pay in order to get rid of the lien. The first guy has to pay the second guy the said amounts within a certain period of time as stated by the state, if not, the former may lose his prop, which then goes into the hands of the latter. nnThat’s good news for the 2nd fella who buys the certificate, which equates to the statement “tax liens are great, I love ‘em”. Basically, your perception on it entirely depends on which end you find yourself at.