A tax lien represents a legal claim imposed by the government on a property due to unpaid taxes by the property owner. This occurs when taxes on real estate or other significant assets are delinquent. Municipal governments often offer these tax liens for sale to investors. Upon purchasing a tax lien, investors assume the responsibility to cover the outstanding tax debt. They then acquire the right to collect the owed amount plus interest from the property owners. This process offers a potential return on investment through the accrued interest on tax debts.
For property owners and potential investors interested in tax lien sales or resolving tax delinquencies, consulting with a tax advisor or real estate expert is advisable.