What is the difference between a tax lien and a tax deed?

What is the difference between a tax lien and a tax deed Introduction: The Basics of Tax Liens and Tax Deeds Hello everyone, and welcome to today's video. We're going to explore the fascinating realm of tax liens and tax deeds. While these terms may sound similar, they refer to distinct aspects of property ownership and taxation. Let's start by understanding the fundamental definitions. Tax Liens: A Closer Look When a property owner fails to pay their property taxes, the local government places a lien on the property. This lien serves as a legal claim and ensures that the government receives its due. To recover the unpaid taxes, the government may sell the lien to investors through an auction. The investor, in turn, pays the outstanding taxes and becomes the lienholder. The property owner is now required to repay the investor, often with interest, within a specified redemption period. Tax Deeds: The Path to Property Ownership In some cases, when the property owner fails to redeem the tax lien within the specified period, the investor can apply for a tax deed. A tax deed is a legal document that transfers the property's ownership from the original owner to the investor. This process is often referred to as a 'tax sale' or 'tax foreclosure.' Once the investor acquires the tax deed, they become the rightful owner of the property, subject to any existing mortgages or liens.