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Definition: Tax Lien Certificate
Tax Lien Certificate is the certificate of claim against the property for which tax is not paid by the owner and the tax lien certificate bearer has the claim over the property. Generally Tax lien certificate are issued by the local government who are authorized to collect tax and in case of tax defaulter, Tax Lien Certificate is issued and the claim of property is shifted to government.
The government can also sell this tax lien certificate to some other buyer to transfer the risk and rewards associated with the property. Government sell the tax lien certificates through the auction and the investor with the highest bid win the auction and the investor then pay the cash to government thereby transferring the risk and rewards of the lien from government to investor.
The investor, with the Tax lien certificate, has the right to earn profit by doing business on the claimed property.