Which states are tax lien states and which are tax deed states?

What does it mean to call a state a tax lien state?

It means the county sells the debt rather than the property. You pay the unpaid tax, the owner keeps the house, and you collect your money back with statutory interest when they settle. Florida, Arizona and Iowa work this way.

The attraction is the rate, which is written into state law. The limitation is that you are a creditor, so the property is not the plan.

And a tax deed state?

The county sells the property. Once the sale is confirmed the previous owner is out and you are in, with whatever title problems came along. Mississippi, Arkansas and Alabama all sell deeds or hold them for later sale.

The attraction is that you can end up owning real estate for the price of the back taxes. The limitation is that you own it with every problem that made nobody else bid.

What is a redeemable deed state?

A hybrid. You get the deed at the sale, but the former owner keeps the right to take it back for a set period by repaying you plus a penalty set by statute. Georgia, Texas and Tennessee work like this.

In practice you are often paid the penalty rather than keeping the property, which makes a redeemable deed behave more like a lien with a deed attached.

Is Texas a tax deed state?

Texas is a redeemable deed state. You get a deed at the sheriff's sale, and the former owner has a period to redeem by paying you a statutory penalty, which is longer for a homestead or agricultural land than for other property.

Texas also produces a lot of struck-off inventory, which means parcels the taxing authority kept because nobody bid on them, and which it then resells. That is a separate route into the same state.

Which states have no redemption period after a deed sale?

Pure deed states are the ones where, once the sale is confirmed, the former owner has no statutory right to buy it back. Arkansas is a clear example: since 1 July 2023 a parcel sold through the Commissioner of State Lands cannot be redeemed.

That is genuinely useful if you want certainty of ownership. It is also why those parcels need more diligence, because there is no window in which somebody hands your money back.

Which system should I start with?

Start with what you want to end up holding. If you want interest on your money and no property, look at lien states. If you want land or a building, look at deed states and budget for the title work.

Then read that one state's rules properly before you widen out. The commonest beginner mistake is applying one state's redemption period, bidding format or notice duty to another state where none of it holds.

Putting real numbers on it

The states we hold live inventory in, and which system each uses

• West Virginia, lien, 3,771 parcels across 52 counties. Certified to the State Auditor after no bid at the sheriff's sale.
• Florida, lien, 28 counties. County-held certificates at the statutory 18 percent.
• Mississippi, deed, 71 counties. State tax-forfeited land.
• Arkansas, deed with no redemption, 43 counties. Post-auction parcels from the Commissioner of State Lands.
• Alabama, deed, 39 counties. State-held land sold on application, 15,944 parcels.
• Texas, foreclosure and struck off, meaning parcels the taxing authority kept because nobody bid, across 86 counties.

The system changes what you pay and what you get. A Florida lien in Lake County is on offer at $200.49 and pays up to 18 percent a year. An Arkansas deed carries a minimum bid rather than a price, and once it sells it cannot be redeemed at all. A Washington DC lien on 3333 Brothers Pl SE was bid off at $1,010.99, of which only $434.37 was actual tax. Same category, three completely different things to own. This is not a list of every state: it is the states where we hold current inventory, refreshed nightly from nine sources, which is more useful than a map of the whole country.

What goes wrong

• You apply one state's rules to another. Redemption periods, bidding formats and notice duties are all set state by state, and a missed deadline in an unfamiliar state can cost the whole position.
• You assume a deed means clean title. It usually does not until a court action called quiet title is done, and that is your cost.
• You buy in a redeemable deed state, meaning one where the former owner can still buy it back, expecting to keep the property. In Georgia, Texas and Tennessee you may simply be paid a penalty and handed back out.
• You chase the highest advertised rate. Iowa's 24 percent a year and Florida's 18 percent are ceilings, and at a competitive auction the bidding takes them down.
• You pick the state before the strategy. Lien states pay interest, deed states hand over property. They suit different plans and different amounts of patience.

Frequently asked questions

Related terms

• What is a tax deed?
• What is a tax lien?
• Does tax lien investing actually work?
• All 34 tax sale terms