Tax Lien Investing Glossary: 15 Key Terms

Updated Oct 8, 2026

Like any specialized field, tax lien investing has its own vocabulary. You do not need a law degree to follow it. Here are the terms you will see most often, explained simply.

1. Tax lien certificate (TLC)

The official record of your right to collect a property's overdue taxes, plus the interest or penalty set by state law, after you pay those taxes to the county.

Think of it as: an IOU secured by the property and administered by the county.

2. Tax deed

A deed that transfers ownership of the property itself. At a tax deed sale you are bidding on the property, not on the debt.

Contrast: a tax deed gives you ownership sooner (sometimes subject to a redemption right), but usually costs more up front and carries the property's problems with it.

3. Redemption period

The window set by state law during which the owner (or another party with an interest, such as a lender) can pay the debt and keep the property.

Think of it as: the repayment window on a loan.

4. Redeem

The act of paying off the lien: the original amount plus the interest, penalties and costs allowed by law. Once a lien is redeemed, it is cleared and the investor is paid.

5. Foreclosure

The legal process a lien holder uses to move toward ownership after the redemption period ends without payment. Depending on the state, it may be a court case, an application for a tax deed, or a notice process.

6. Over-the-counter (OTC)

Liens or deeds offered at a public sale that did not sell and are later available for direct purchase from the county (or the state), without competitive bidding. Availability, pricing and the rate you earn depend on the state and county.

Note: leftovers can be good value, but some are left over for a reason. Research them like any other purchase.

7. Auction

A public sale, in person or online, where investors compete for tax liens or tax deeds.

8. Interest rate

The return the law allows on a redeemed lien. Some states set a fixed rate; others let bidders compete by bidding the rate down. It is a legal maximum, not a promise that you will be paid.

9. Premium

An amount bid above the lien's face value in states that use "bid up" auctions. In many of those states the premium earns no interest, and in some it can be lost.

10. Assessed value

The value the county assessor assigns to a property for tax purposes. It is often different from market value, sometimes by a lot.

11. Parcel number

The unique identifier the county assigns to each piece of land (also called APN, PIN or folio number). Use it to match records across county offices.

12. Face value (of a lien)

The total of delinquent taxes, penalties and sale costs that makes up the lien amount, which is normally what you pay to acquire it before any premium.

13. Portfolio

All of your tax lien and tax deed holdings together.

14. ROI (return on investment)

A simple measure of profitability: net profit divided by the total amount you invested, including premiums, fees and any legal costs.

15. Due diligence

The research you do before buying: location, access, condition, value, other liens, zoning and the county's rules. It is the single biggest factor you control.

Ready to put the words to work? Read What is a tax lien certificate? or try the beginner lessons at LienDeed Academy.

This article is general information, not financial or legal advice. Tax-sale rules change; always confirm with the county.