However, most states give the property owner one to two years to redeem. If the certificate has not been redeemed during the redemption period, the certificate holder can file a judicial suit to foreclose on the certificate for the amounts already paid.
It is important to note that the winning purchaser of a tax lien certificate does not own the property, rather the investor owns a first position lien.
Tax deeds differ from the above process (tax liens), the most important difference is if you purchase a tax deed at a sale, you own the property immediately - free and clear of other liens (except any county fees). The original owner of the property does not get a redemption period.
Some states operate under a hybrid system; the hybrid system works like a tax deed sale - in that the investor owns the property upon receipt of the tax deed - but the original owner gets a redemption period. This could vary from six months to two years, check your state statute.
For the original owner to redeem, they would have to pay all of the back taxes owed, plus any amounts over the taxes paid (?premium? - the amount bid over the face value of the lien), penalties (on the taxes and premium) and county costs.
States in the United States will fall into one of three categories:
a. Lien States - Investor has only a lien and no other rights to the property, receives interest until lien is redeemed by the property owner. Such states are: Alabama, Arizona, Colorado, District of Columbia, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Vermont, West Virginia and Wyoming
b. Deed States - Investor actually gets title to the property, no interest rate since the Investor will be acquiring the property. Such states are: Alaska, Arkansas, California, Idaho, Kansas, Maine, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Virginia, Washington, Wisconsin