I saw an interesting article that was published last week on Forbes.com. You can read the article here: http://www.forbes.com/sites/dalebuss/2013/01/20/predatory-property-tax-lenders-are-targeted-in-texas-effort/?goback=%2Egde_1907290_member_206764131.

The article is about a property tax lenders in Texas that loan homeowners money at very high interest rates and then put a “tax lien” on thier property. These liens are not the same as government tax liens, they are private tax liens. And these type of liens are not allowed in tax lien states.

Only government issued tax liens are allowed in lien states. In a tax lien state only the local government is allowed to issue a tax lien. You could purchase a tax lien from the county or municipality or from another investor who was the origianal purchaser of the lien. But the lien is issued by the government entity. Lien states do allow a private investor to loan money to a homeowner and put a tax lien on the property. So don’t confuse these tax liens with government tax liens, they are not the same thing.

As you can see from this article the companies that do this are getting a very bad reputation. They have even branched out to other states. I remember getting a call from one of these companies a few years ago. They were interested in expanding their operation into other states including New Jersey, and I let them know right away that it couldn’t be done, because in New Jersey they would not be able to put a tax lien on a property unless they purchased the lien from the municipality. In fact it is illegal in New Jersey, and most tax lien states to use the published tax sale list to solicit delinquent property owners in order loan them money at high interest to pay their taxes.