DEFINITION of Sale of lien
A lien sale is the sale of the claim or “hold” placed on an asset to settle an unpaid debt. As a general rule, sales of liens are made through public auctions and the lien relates to real estate, automobiles and other personal property. Under the laws of a particular state, contractors, subcontractors and suppliers can put a lien on a property they have worked on pending payment for the services rendered.
BREAKING DOWN Sale of privileges
The purchase of overdue tax liens during a sale is becoming an increasingly popular form of investment, and is similar to the purchase of a long-term certificate of deposit (CD). However, unlike a CD, tax privileges cannot be sold to the tax authorities and must be kept until they are reimbursed. The redemption of the privilege purchased is generally made at a given rate of return within a specified period.
How Privilege Sales Can Be A Source Of Income
The sale of liens for unpaid debts on property may result in an additional increase in the amount owed. When the lien debt is sold, usually by a local government agency, the buyer can employ a lien service company which can add more fees and interest to the lien. This allows the buyer to see a return on investment since the debtor must now pay the additional fees imposed.
In many cases, several notices of impending lien sales will be sent to the debtor before a file notice indicating the upcoming auction date.
Although a debtor may be liable for taxes and other seats, there may be exceptions that will prevent their property and other assets from being sold by privilege. For example, homeowners with disabilities, seniors and veterans may be eligible for exemptions. Active duty military personnel may also be eligible for an exemption for the sale of liens on their property. Each jurisdiction will have its own criteria, application process and time window when the responsible agency should be contacted.
Owners of property subject to a sale by privilege can have their property withdrawn from this sale by making payment arrangements to update their outstanding debt.
There may be special procedures for different types of lien sales, such as the auction of a vehicle of a certain value. How it is managed may differ from the sale of a lien for the contents of a self-storage unit if the owner does not pay his bills to the storage company on time.
Notice of lien sales can be posted online by the local supervisory agency and in local newspapers.