Tax liens vs. tax deeds: what you actually buy

• A tax lien is a debt. You pay the owner's overdue taxes and get the right to be paid back, usually with interest. You don't own the property.
• A tax deed is the property. The county already took it for unpaid taxes and sells it. The winning bidder gets a deed.

Most of New York, including Albany and the Capital Region, sells tax deeds: the county forecloses and auctions the property itself.

In states that sell liens, the county auctions off the right to collect the unpaid taxes. The owner then has a set time, called the redemption period, to pay it off with interest. If they pay, you get your money back plus interest. If they don't, you can start a foreclosure to take the property — which takes more time, legal costs and patience.

In New York, lien sales are rare. A few downstate places, like Nassau County on Long Island, sell lien certificates. New York City sells its tax liens, but not to individual investors. If a course promises easy tax lien profits in Upstate New York, be careful: that's not how it works here.

Most New York counties enforce property taxes under Article 11 of the Real Property Tax Law. When taxes go unpaid — generally for about two years — the county starts a foreclosure against the property itself (called in rem). If nobody pays, the county takes title and sells the property, usually at an online auction.

• The foreclosure cuts off the old owner's title and most claims against the property, including mortgages and judgments.
• Recorded easements and rights of way stay with the property.
• Federal tax liens follow federal rules, so check whether the IRS has a claim.
• Many counties don't let the former owner bid on their own property.

In 2023 the U.S. Supreme Court ruled in Tyler v. Hennepin County that a county can't keep the extra money when a foreclosed home sells for more than the taxes owed. New York changed its law in April 2024 to match.

Now, after a sale, the county works out the surplus — what's left after back taxes, interest, fees and costs — and tells the former owner, who has three years to claim it. Some counties paused their auctions while they changed their rules, so auction calendars may look different than they used to.

• You're buying the property as is, usually without seeing inside.
• The county gives you a deed with no promises about condition, and getting title insurance can take extra work.
• Budget for the price, the auction fees, repairs and upcoming taxes — and have cash, because most auctions want a deposit right away.
• The land bank is another way to buy foreclosed property, by application instead of bidding.

This is general education, not legal advice. Rules change and every county writes its own auction terms — read them before you bid.