What is a tax lien assignment?

An assignment is the transfer of a legal interest.  In its most basic form, one party (the Assignor) agrees to sell and/or transfer its legal interest in something to a third party (the Assignee).  The parties will typically draft a separate purchase agreement for the asset to be assigned. The assignment will then be executed by the parties once the sale is complete.

Tax lien assignments

Assignments are very common in many different areas of law and finance.  Probably the two most common types of real estate related assignments are assignments of a mortgage/deed of trust or a purchase contract assignment (e.g., wholesalers).  Just as the rights under a promissory note or under a purchase agreement can be assigned, a tax sale certificate can assign his or her tax lien.

There are many different reasons why an investor may assign a tax lien.  For example, an investor may purchase a tax lien hoping that the property redeems so that they can recoup their investment, plus the interest that accrued.  If the property does not redeem, and the investor does not want the property, he or she can assign the tax sale certificate and tax lien to another investor.  The new tax sale certificate holder then assumes all of the rights under the tax certificate, including the right to foreclose and to take title to the property upon the judgment.  Importantly, the new certificate holder also assumes the right to collect the refund (plus interest) upon redemption of the property.

The assignment agreement is a private agreement between the two parties and the assignment price may be for more or less than the redemptive value of the tax lien.  Once an agreement is reached an Assignment of Tax Sale Certificate is executed. The new holder must then notify the County (and the court, if applicable) and may record the assignment among the County land records.

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