A tax lien sale is a government-run process that allows a city, county, or other local authority to recover unpaid property taxes. Instead of waiting, the government may sell the tax lien (the legal claim for the unpaid taxes) to a third party or investor.
What is a Tax Lien?
- The tax lien is a legal claim against the property for the unpaid taxes, interest, and penalties.
- At a tax lien sale, investors bid to pay those taxes on behalf of the owner.
- The winning bidder pays the back taxes to the government and receives a tax lien certificate.
- The property owner keeps the property but must repay the investor within a legally defined redemption period (often 6 months to 3 years), plus interest and penalties set by law.
- If the owner does not redeem the lien in time, the lien holder may be allowed to foreclose and potentially acquire the property (rules vary by state).
Snapshot of a Tax Lien Sale
Important Information
- No Right of Possession: Buying a tax lien does not give ownership, possession, use, improvement or access to the property.
- The buyer receives a Tax Lien Sale Certificate of Purchase, which is a recorded lien that earns interest.
- The lien may be redeemed by the property owner or other legally interested parties at any time before a Treasurer’s tax deed is issued.
- A Treasurer’s tax deed cannot be issued until at least three years after the original tax lien sale.
Endorsing Additional Taxes
- Certificate holders may choose to pay future delinquent taxes and charges.
- These amounts are added to the existing lien.
- Endorsement information is mailed to eligible certificate holders each August.
Bonus Bids
- Obtaining a tax lien can sometimes be competitive. If you are bidding against your peers to hold a tax lien, you are offering up a ‘bonus bid’ to hold the lien.
- If you offer a bonus bid when bidding on a tax lien, know this is the amount you will pay to obtain the tax lien and this total is not included in your redemption amount.
- Bonus bids are non-refundable and we encourage all potential investors to exercise caution when determining their bidding amounts.
Applying for a Treasurer's Deed
- If the lien is not redeemed after three years, the certificate holder may apply for a Treasurer’s tax deed.
- The process usually takes 12–15 months, and longer if the property is complex.
- The current deed application fee is $1,300.
- Deed application costs are recoverable if the lien is redeemed, but no interest is earned on those costs.
- All taxes and special assessments must be paid before a deed can be issued.
Important Notices
- A Treasurer’s deed is not guaranteed to be issued to the original lienholder.
- Properties must now go through a secondary auction to help ensure fair compensation to the property owner.
- El Paso County does not guarantee the condition or marketability of property acquired through a tax deed.
- If a lien is wrongfully sold, any required interest paid will be calculated according to Colorado law.
Interested in attending a Tax Lien Sale Auction?
Please check the Tax Lien Sale webpage for updates on the next event!