Can You Really Buy Repossessed Homes by Just Paying the Property Taxes Owed?

Short answer: Technically, yes. Long answer: It's a bit more complicated than that.

Some repossessed homes were repossessed because of back taxes owed by the homeowner to local, state, or federal government. In the event of delinquent taxes that have not be repaid, a government agency can slap a tax lien on the property – which basically means that the property is claimed by the government in lieu of taxes owed.

The IRS is the biggest producer of tax liens, as you can imagine, and places them on homes every year for taxes owed. Property tax liens are also very common.

If a property has a tax lien, and you purchase the tax lien at a tax sale, you effectively buy the right to take possession of the home if certain circumstances occur. These circumstances usually involve the owner of the property not paying their taxes for a certain period of time. The lien will have a contract period. After this contract period expires (some are for a year; some are longer), if back taxes are still owed, the holder of the tax lien can take possession.

Of course, homeowners rarely allow a few thousand in back taxes to cause them to surrender a home that is much more expensive. They usually pay the back taxes. If they do not, though, the home could become yours.

In many jurisdictions, however, tax liens are not primary – or first – liens. In other words, holders of tax liens are not the first in line to be paid through the property. So, even if the conditions of the lien are fulfilled, you may not receive the property – another creditor could be ahead of you in line.

Technically, you can buy properties by purchasing tax liens. It is difficult to do, though, and not as common as some might think.