Redemption Period

The redemption period is the window of time established by law during which a property owner can pay off their delinquent taxes, interest, penalties, and any associated fees to "redeem" their property and remove the tax lien. This period varies significantly by state and can range from as short as six months to as long as four years.

For tax lien certificate investors, the redemption period is a critical factor in the investment timeline. During this period, the investor earns interest on their investment as defined by state law. The longer the redemption period, the longer the investor must wait to either collect their return or begin foreclosure proceedings. Most property owners do redeem their taxes, which means the investor earns their interest and moves on to the next investment.

If the property owner fails to redeem during the specified period, the tax lien certificate holder can typically apply for a tax deed or initiate foreclosure proceedings. This is when the investment can become especially lucrative, as the investor may acquire a property for just the cost of the unpaid taxes.

Understanding the redemption period for the specific state or county where you're investing is essential. Some states have strict notification requirements that must be met before the redemption period expires. Failing to follow proper procedures can delay or even void the investor's right to foreclose.