Is a lien for utilities worth paying tax?


Delinquents other than property taxes can be sold through tax sales. This includes unpaid utilities, sewer, water or garbage bills, or any special estimates. Basically all unpaid bills that are paid to the local government (municipality, municipality, county or tax district) and remain unpaid can be sold at a tax sale as a tax lien. As with unpaid taxes, the holder of the lien is in the first place and can enforce the property if the lien is not redeemed within the redemption period. The lien holder also has the option of paying additional utility fees (and even additional taxes) if the property owner does not pay them on time.

Many states give you the option to pay the fees that follow and collect maximum or default interest on your subscribers. The exception is Florida: Florida counties do not allow you to pay subsequent taxes and they will sell the lien each year in a tax sale. So you don’t have that opportunity there, you just have to try to buy a lien every year.

A utility lien can be a good investment for several reasons. First, the delinquent amounts for these liens are usually less than for taxes, so you need less money to buy a utility lien than to buy a tax lien. And because these liens are smaller, institutional investors rarely bid on them, so they are a little less competitive than larger tax liens. Second, if you are the owner of a lien, you can pay additional taxes, as well as a sewer fee if the owner does not pay them. I had several liens that I had originally purchased as small sewers, and later, when the property owner stopped paying taxes, I was able to pay the arrears of taxes, as well as the amounts of sewers. That added thousands of dollars to my original lien. Since this was a tax lien in New Jersey, I was able to get 18% of all subsequent tax payments!

Buying a municipal lien is one of the strategies I keep in my double-digit portfolio of tax lien !!