How do you protect your investment in tax liens? That all depends on which state or municipality you are investing in. In Florida, for example you don’t pay subsequent taxes until the redemption period is over and you can apply for tax deed. In other states you can pay subsequent taxes but you don’t have do. But there are counties and municipalities that force the tax lien holder to pay them.
How do they force the investor to pay the subsequent taxes on their tax lien property? There are 2 ways they can do this. In Arizona for example there some counties that will send the bill for subsequent taxes to the tax lien holder. And if the investor doesn’t pay them by the required date, they will sell his or her lien with the current lien in the next tax sale. The investor will get paid on their lien, but will not retain any right to foreclose on the property. They will not keep their lien on the property.
There is also another way that a taxing district could force the tax lien investor to pay subsequent taxes. That is to take away their right to property if they don’t make the tax payments! That’s what they do in one city in the state of New York. So to protect your investment in tax liens in this NY city, you must pay your subsequent taxes. And you have to pay them on time. Because if you’re late paying them you will lose your investment!
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