Tax lien vs tax deed sale: what is the difference?
A tax lien sale sells the unpaid tax debt to an investor, who earns interest and may later foreclose; the owner keeps the property until the redemption period ends. A tax deed sale sells the property itself. Which one applies depends on the state, and sometimes on the county.
Tax lien sale (tax lien certificate)
When an owner does not pay property tax, the county can sell a certificate for the unpaid amount. The buyer pays the tax and earns interest while the owner has time to repay. If the owner repays in time, the buyer gets the money back with interest and never owns the house. If the owner does not repay, the buyer may start a foreclosure to get title, depending on the state.
States that use tax lien certificates include Arizona, Colorado, Illinois, Maryland, Nebraska and Alabama, among others.
Tax deed sale
In a tax deed sale the county sells the property itself to cover the debt. The winning bidder receives a deed. Some states give the former owner a short period afterwards to redeem, and others none. Recent court cases, including Tyler v. Hennepin County in 2023, also require states to return surplus equity to the former owner in many cases.
Side by side
- What is sold: lien certificate = the debt. Tax deed = the property.
- Who owns the house after the sale: lien = the owner until foreclosure. Deed = the buyer, subject to any redemption right.
- What the buyer earns: lien = interest. Deed = the property and its value.
- Risk to the buyer: lien = the owner repays and you only earn interest, or the property is worth less than the debt. Deed = liens that survive the sale, condition, occupants.
Hybrids and variations
Many states mix the two. Florida sells tax certificates first and tax deeds later. Ohio mostly uses county tax foreclosure, with some counties also selling certificates. Texas uses a tax foreclosure lawsuit and a sheriff or constable sale. Pennsylvania counties hold an upset sale through the Tax Claim Bureau. Always read your county's own rules.
Why investors who find sellers care
If you want to buy from the owner before any sale, the signal is the delinquent list, not the sale. Owners who are behind on tax and still living in or holding the property can still sell on their own terms. After a tax deed sale the owner has little left to sell. Use the redemption table to see how long that window is in your state.
Official sources and further reading
- Investor.gov: tax lien (glossary)
- Legal Information Institute: tax lien
- Legal Information Institute: redemption
- USA.gov: find local government offices
Outside sites are run by their owners. General information, not legal or financial advice.
Questions
Is a tax lien the same as a tax deed?
No. A lien is a claim for unpaid tax. A deed transfers ownership of the property.
Do I own the house if I buy a tax lien certificate?
No, not at first. You own the right to the owner's repayment with interest, and in some states the right to foreclose if the owner does not pay.
Which states sell tax deeds?
It varies by state and sometimes by county. See the table for every state we cover.
Is this legal advice?
No. It is general information. Rules change, so confirm with the county and a local real estate attorney.
How we make these guides
Written by the LeadCounty editorial and data team from official county, court and state sources and our own weekly counts. We name the office behind every number, say what we cannot see, and fix mistakes when you tell us. See our editorial standards and methodology. General information, not legal or financial advice. Refreshed weekly.
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