Tax Foreclosures
What are Tax Foreclosures?
Tax foreclosures are foreclosures on a property where the property owner has failed to pay local, state or federal taxes for personal property such as real estate taxes or federal income tax. Tax foreclosure proceeding vary from state to state and county to county but are similar to bank foreclosures in many ways. Federal Government tax foreclosures are tax foreclosure properties where the property owner failed to pay income tax on the property and the federal government imposed a tax lien against the property. Real Estate owners are required to pay property taxes to their local taxing authority. In the event that the property owner fails to pay their property taxes than the local authority can move to redeem the delinquent taxes; by way of a tax foreclosure sale 
is one of those ways.
Tax foreclosures are in general a more strict foreclosing mechanism than bank foreclosures. Each state varies on their tax foreclosure law so it is best to consult with an experiences tax foreclosure professional in the specific geographical area that you may be interested in pursuing tax foreclosures. Tax liens are superior to mortgage liens and the mortgage holders value in the property could be lost if the property is foreclosed on due to back taxes. This is an advantage that tax foreclosures have over bank foreclosures. Where in bank foreclosures if you inherit the property at a foreclosure sale than you will likely inherit the back taxes as well, whatever they may be. On the other hand those that inherit a tax foreclosure property will generally be free and clear of any mortgage liens or debts since the tax lien supersedes them.
Difference Between Tax Liens and Tax Deeds
Each state has different laws regarding tax lien sales, tax deed sales and tax foreclosure laws. In general tax liens are liens that are put on a property by the local taxing authority. The property owner than pays their property tax, usually either monthly or quarterly to the taxing agency or to their mortgage company (with their mortgage) who than pays the tax authority. In the event that property owner fails to pay their property taxes than a notice is sent to both the mortgage lender and to the mortgage borrower. The mortgage company will usually pay the back taxes since they do not want to lose their interest in the property and than demand the money back from the property owner. In the event that these taxes are not paid, and the taxing authority has made repeated attempts in order to recoup the back taxes, than one of two methods usually occur: The property end up foreclosed on and sold which is called a tax deed sale, or the governing tax agency that is owed the back taxes to sells the tax lien in what is called a tax lien certificate.