What Is a Tax Lien Certificate?

A native of Brazil, Tami Yassim most recently worked for Citi Habitats, a New York real estate firm that draws on extensive knowledge of the city to help clients find homes to rent and purchase. In addition to attending industry events such as the Wealth Expo, Tami Yassim maintained membership in the non-profit National Tax Lien Association.

The National Tax Lien Association provides training and resources to help individuals make successful investments in tax lien certificates. An alternative to becoming a landlord, investing in tax lien certificates can be a useful way to include real estate in a portfolio. A tax lien certificate is issued by a county or municipality when a homeowner falls behind on property taxes.

When a property has a tax lien on it, it cannot be sold until all past taxes are paid. Investors can purchase the lien certificate, usually at a public auction, and with it receive the right to collect past property taxes, plus interest from the homeowner. According to the National Tax Lien Association, an estimated $14 billion in property taxes go unpaid each year, $4.2 billion of which is sold to private investors.