Over-the-Counter Tax Liens: The Hidden Market Individual Investors Can Actually Win
About this article: “Marcus” is TaxLienSimple's educational narrator. First-person stories and dollar examples are illustrative scenarios written to explain real tax-sale concepts — they are not the personal trading history of a specific investor. Rate and legal information is sourced separately to official statutes and government records (see About and each guide's citations).
TL;DR
- →Over-the-counter (OTC) tax liens are certificates that didn't sell at the main county auction - usually because no bidder wanted them.
- →They're available in Florida, Arizona, Colorado and several other states, sold directly from the county at face value with no bidding competition.
- →The advantage: you get the full statutory rate instead of bidding it down. The risk: these liens didn't sell for a reason - worthless land, contamination, or title problems.
- →Most OTC inventory is garbage, but the good ones exist, and individuals have a real shot because institutional buyers already passed.
What Are Over-the-Counter Tax Liens?
When a county holds its tax lien auction, not every certificate sells. Some properties attract zero bidders - a remote parcel of Arizona desert, a Florida lot with no road access, or a property the whole room knows is over-assessed. Those unsold certificates don't disappear; in many states the county offers them over the counter, meaning you buy them directly from the treasurer's office (or an online portal) at face value plus accrued interest, with no bidding war. Understanding why a lien went OTC is the first step: no bidders, over-assessment, remote or inaccessible land, environmental contamination, title defects, or institutional screening. The honest truth is most OTC inventory is garbage - but because institutional buyers with automated tools already passed, you compete against a much smaller pool of locals and individuals.
Which States Offer OTC Liens
OTC availability varies widely. Florida is the OTC king - counties like Broward, Miami-Dade, Polk, and Hillsborough maintain active year-round lists, some published online. Arizona (Maricopa and Pima have online portals) and Colorado also offer them, while New Jersey doesn't (unsold liens stay with the municipality).
| State | OTC? | Online Access | Statutory Rate |
|---|---|---|---|
| Florida | Yes - year-round | Partial (some counties) | 18% |
| Arizona | Yes | Yes (Maricopa, Pima) | 16% |
| Colorado | Yes | No - call or visit | 9% + Fed discount rate |
| Illinois | Varies by county | Rare | Up to 18% |
| Indiana | Yes | No - call directly | Varies |
| Nevada | Yes | No | Varies |
| New Jersey | No | N/A | N/A |
How to Find and Screen OTC Liens
Finding OTC liens takes more legwork than an auction. Identify target counties (larger counties have more inventory but more competition; smaller rural counties have fewer but sometimes better deals). Contact the treasurer or tax collector and request the current OTC inventory - ask if they call it a struck-off list or resale list, and confirm the purchase process, payment methods, and registration requirements. Then screen ruthlessly: for every certificate verify property type, location (paved road? flood zone?), assessed vs market value, ownership (deceased? multiple owners? bankruptcy?), prior liens (IRS, code violations, municipal assessments), and environmental risk. OTC liens demand more due diligence, not less, because the market already rejected the property once. Buying based on the list alone - without researching the property - is the single biggest OTC mistake.
| Factor | OTC | Live Auction |
|---|---|---|
| Interest rate | Full statutory rate | Often bid down to 0-5% |
| Competition | Low - individuals and locals | High - institutions dominate |
| Property quality | Mixed - many duds, some gems | Higher average quality |
| Due diligence time | Ample - research first | Limited - pre-auction only |
| Inventory | Year-round | Seasonal (1-2/year) |
What Experienced Investors Watch For
The warning above - most OTC inventory is garbage - isn't a hunch. It's what investors who have done this for a decade-plus keep telling beginners, in almost identical terms, on the forums where this stuff gets discussed honestly. Leonard L., who has bought at auction in Riverside County, California for more than ten years, has watched newer buyers consistently overpay against real comps - pointing to one case of someone paying $30,000 for land typically worth $5,000, still unable to break even nine years later (BiggerPockets, Jan 28, 2015). Bruce Lynn, another longtime BiggerPockets contributor, tells beginners to spend their first two or three auctions just watching before they bid: 'I've seen so many people buy landlocked properties, partial ownership, worthless strips, land in flood zone, wrong house, and so many other pitfalls' (BiggerPockets, Jan 27, 2024). And the risk isn't limited to vacant land - a TikTok commenter flagged the same pattern on occupied Florida tax deed property: 'In FL if you win the deeds you gotta make sure there isn't any city liens or county liens or they stick to the property' (kingsammiam, TikTok comment, Mar 13, 2023). None of this reverses the opportunity case above. It's the same reason the OTC list skews toward properties good buyers already passed on, and it's exactly why screening ruthlessly - not skipping it because there's no bidding war to survive - is what separates the investor who finds a $512 lien like James's from the one who inherits a landlocked lot nobody wanted.
The Treasure-Hunt Reality: A $500 Lien That Worked
OTC investing is a treasure hunt through a landfill - the average list is 80-90% garbage: swamp land, waterless desert parcels, dying-town commercial lots, and properties with $200 in back taxes and $80,000 in code liens. But buried in it are certificates paying 12-18% with no competition. James, a part-time Denver investor, called a rural Colorado treasurer three months after the auction and got a 47-certificate PDF. Most were access-less mountain parcels, but one was a 0.3-acre lot on a paved road with visible water and sewer, assessed at $18,000 (comps $12,000-$15,000), owned by an out-of-state heir. The lien was $512 at an effective ~14.25%. He bought it, and eight months later a title company handling the heir's other sale flagged the delinquent taxes; the heir paid to clear it. James netted $48.72 on $512 - a 14.25% annualized return for three hours plus one drive. The winners aren't the biggest bankrolls; they're the ones willing to make calls, read 500-line lists, and say no 49 times out of 50.
Frequently Asked Questions
What does over the counter mean in tax lien investing?↓
OTC tax liens are certificates that did not sell at the county's main auction. Afterward many counties make these unsold certificates available for direct purchase from the treasurer's office, usually at face value with no bidding competition.
Which states sell over-the-counter tax liens?↓
Florida, Arizona, Colorado, Illinois (varies by county), Indiana, Nevada, and Iowa (limited) are among them. Availability and process vary by county, so always call the county treasurer directly.
Are OTC tax liens a good investment?↓
They can be, but most OTC inventory is low-quality. The advantage is no bidding competition and full statutory rates; the risk is these liens didn't sell for a reason. Success requires rigorous due diligence.
Do OTC liens earn the same interest as auction liens?↓
Yes, and often the advantage is you get the full statutory rate because there's no bidding process driving it down.
What's the biggest mistake investors make with OTC liens?↓
Buying based on the list alone without researching the property. The list gives you the parcel and tax amount - it won't tell you the land is underwater, landlocked, or contaminated.
From real investor threads
What people get wrong about OTC tax liens
Over-the-counter and county-held certificates are the one place the full statutory rate is still on the table. The threads below are about why they were left over, and who not to buy them from.
Are OTC tax liens worth it? "Only the junk is left" versus a $36,000 leftover
The mistake: Treating the whole county-held list as either worthless or a bargain. In heavily bid online states most of it was rejected by professionals; in quieter counties it is where the best lien of a career came from.
“my most profitable tax lien was the first one I bought which was a Leftover. I made $36K in about 2 years on an original lien of about $3K.”BiggerPockets forum (Ned Carey, Baltimore, replying to an Arizona investor who called leftovers junk): read the thread
How to avoid it: Filter hard: assessed value against purchase amount, legal description, prior-year certificates outstanding. Buy within weeks of the sale, before the good leftovers go.
Every county-held certificate we track, by county →The 95% figure: the industry body's warning on OTC liens
The mistake: Draining retirement money into OTC liens on structures that no longer exist, on the strength of a seminar.
“Convincing someone to drain their 401(k) to buy a tax lien on a burned-down house is the financial equivalent of selling a losing lottery ticket.”National Tax Lien Association press statement (industry body, not an investor): read the thread
How to avoid it: Treat county-held inventory as pre-rejected until you have done parcel-level diligence. The NTLA's claim that over 95% of OTC liens fail to redeem is their figure, not ours; our county pages show the assessed value next to every certificate so you can see which ones are secured by anything.
Screen OTC parcels by Research Score →Never buy OTC liens through a club that "screens" them
The mistake: Paying $1,000 membership plus $5,000 in liens to a club, then finding the liens were bad investments, unreceived or expired.
“zero return...all very bad investments...don't expect TLBC to do due diligence.”BiggerPockets forum (John Larson, club member): read the thread
How to avoid it: Buy directly from the county platform (LienHub in Florida, the treasurer's site in Arizona). The middleman adds cost and removes nothing.
Where each county sells them →Assigned liens are being sold because the first buyer wants out
The mistake: Buying an assignment of an existing lien as if it were new inventory.
“I saw a hell of a lot of people get scammed by companies who promised them riches and assigned worthless liens on to them which weren't working out for the initial buyer.”Reddit r/passive_income (u/Morning-Chub, former city attorney, 25 points): read the thread
How to avoid it: Underwrite an assigned lien from scratch and ask why it is for sale. Interest to you on a county-held certificate runs from your purchase date, which is not true of every assignment.
What the rate is really worth →An OTC tax deed at $6,000 cost $10,000 once title was cleared
The mistake: Pricing an over-the-counter deed at the county's figure and forgetting the quiet title action that makes it sellable.
“so now I own it free and clear for 10k.”Reddit r/realestateinvesting (Jefferson County AL buyer, $6,000 deed plus about $4,000 quiet title): read the thread
How to avoid it: Add the quiet title cost for the state to any OTC deed before you compare it with anything else.
Quiet title cost by state →Keywords this article targets
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