These property sales are sometimes called deed sales, land sales, certificate sales, scavenger sales, sheriff’s sales, etc., or just simply referred to as Tax Sales.

What is the difference between “Tax Deeds” and “Tax Lien Certificates”?

Many investors, even very knowledgeable ones, confuse “Tax Deeds” and “Tax Lien Certificates” with each other. Some states are “Deed” states and some are “Lien” states.

California is a “deed” state, meaning when you are the winning bidder at the county Tax Sale you receive a Tax Deed (legal title) to the property. A number of other states are deed states also.

Now some states are “lien” states, meaning when you are the winning bidder at the county Tax Sale you receive a Tax Lien Certificate entitling you to receive a rate of return on your investment (percentage depends on the state/county). Most Tax Lien Certificate purchasers want the tax delinquent homeowner to eventually pay their property taxes so they can cash in their lien certificate and get their investment back with interest.

Now if the homeowner still fails to pay their property taxes you have the option to cash in your Tax Lien Certificate and receive a Tax Deed. But if your goal is to receive the property in the first place you may want to ignore the Tax Lien Certificate sale/auctions and go to Tax Deed sale/auctions.