The Positive Impacts of the Tax Lien System

Local Governments depend on property taxes for funding of the critical services we all rely on like public schools, road maintenance, public safety and healthcare, to just name a few.

So what happens to a community and its services when property taxes go unpaid? Delinquent property taxes impede the provision of important government services and the local government’s fiscal health declines.

So how is this degradation in service provision prevented? Many governments use the sale of tax liens to reclaim this missing revenue and ensure continuation of service provision to their citizens.

Unfortunately, tax liens sales have a negative reputation based on the misconception that they cause homeowners to lose their property to greedy investors, which is an incorrect assumption. Firstly, the vast majority of tax deeds sold in the state of Florida are actually vacant land. 

For those that are not, usually the homeowners are forced into action to redeem the lien by the payment of back taxes. Although this is an inconvenience to the homeowner, the local government is able to collect enough tax dollars with which to fund public services, and the homeowner keeps their home..

Cities like New Orleans who have aggressive tax collection efforts prove highly successful at recovering taxpayer dollars and raising revenue to go toward resident’s top priorities. New York has also historically utilized tax liens, and implementing a lax lien securitization system enabled a collection rate of almost 99 percent.

For those that are not redeemed, there are a variety of reasons these lots’ taxes go unpaid and the homeowner opts not to redeem. Often they were purchased by someone who has passed away and the heirs do not see value in the property or wish to pay for the upkeep. There may be liens attached to the properties which prevent them from holding resale value to those with interest. Since many liens are extinguished in a tax deed sale, this enables the new owners to improve the homes and pay the property taxes in a timely fashion, while preventing vacant properties from becoming eyesores, a drag on the community’s resale capabilities, or a potential danger to those attempting to enter it.

Overall tax deed investors help eliminate community blight by reclaiming and improving vacant or dilapidated properties and paying back the delinquent tax revenue the local government needs to improve crucial public services like schools and hospitals.

We encourage you to do some research into the way your local government handles their tax lien sale process and to request information on how to get involved if you are interested in becoming a tax deed investor yourself.