The truth is often stranger than fiction. On certain occasions, it can be more devious and harsh. This was the case on recent call to our office, regarding a foreclosure tax lien on a piece of property. The caller and her husband have a property, for which property taxes are due. The county was going to sell the property at auction the following day, and the property owner, in a last-ditch effort to save the home, reached out to us to ask for help.

A quick internet search on the County Property Appraiser’s site did not show a lien. A call to the tax collector’s office confirmed the same, but with a twist. I was told that the lien was paid by someone claiming to be from the title company, and that this happens all the time. This answer was deeply unsatisfying, because it logically made no sense. Generally, a mortgage company pays property taxes out of an escrow account. This is factored into the cost of a mortgage payment. But that has nothing to do with the title company. Too far down the rabbit hole to stop, I continued to dig. What happened here, and likely has happened to other homeowners, is a scam that is absolutely egregious.

Some lien speculators seeking to circumvent the system will go to the tax collector’s office the day before a tax lien sale, or the auction of the property, and pay the lien off. This circumvents the bidding process, and avoids having to pay above the face value of the lien. However, these speculators did not buy any interest to collect on the future lien. They merely paid a lien. It is not uncommon for speculators to buy tax liens at auction. These liens are paid by the property owner in 99% of cases, and the lien holder gets their money back, plus interest and a penalty. These liens often sell above the face value of the lien, since the interest and penalty are pre-set, and the return is almost guaranteed.