Guide

Tax Liens Explained

How tax lien certificates work and how investors earn interest on them.

Last updated June 2026

What is a tax lien?

A tax lien certificate represents unpaid property taxes. Investors purchase the certificate and, in return, earn interest until the property owner redeems it by paying the back taxes plus interest.

How you earn

Interest rates are set by statute and vary by jurisdiction, often ranging from 8% to 18%. If the owner redeems, you receive your principal plus accrued interest.

If the lien isn't redeemed

If the owner does not redeem within the statutory period, the certificate holder may be able to foreclose and acquire the property — the higher-risk, higher-reward outcome.

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