How to Buy Tax Liens in Massachusetts: Step-by-Step for Beginners

Massachusetts offers 16% annual interest on tax liens — one of the best guaranteed returns in real estate investing. Here's exactly how the process works, from finding liens to collecting your returns.

How Massachusetts Tax Liens Work

In Massachusetts, when a property owner doesn't pay their property taxes, the municipality issues a "tax taking" — a formal lien on the property. Unlike some states that auction liens to the highest bidder, Massachusetts municipalities hold the liens themselves and charge the property owner 16% annual interest on the unpaid amount.

The opportunity for investors comes through tax title assignments andtax deed sales. When a municipality wants to recover funds faster, they may assign the tax title to an investor, or after the redemption period expires, sell the property at a tax deed auction.

Step 1: Find Tax Lien Properties

Every municipality in Massachusetts is required to publish a list of tax delinquent properties. These are typically published in local newspapers and sometimes on town websites. The challenge? Massachusetts has 351 municipalities, each publishing separately.

You can spend weeks calling town halls and searching newspaper archives, or you can use a platform like LienDeals that aggregates all of this data into one searchable database.

Step 2: Research the Property

Before investing in any tax lien, you need to do your homework:

• • Property value: Check the assessed value on the municipality's assessor database. The lien amount should be a small fraction of the property value.
• • Property condition: Drive by if possible, or use Google Street View. Environmental issues (contamination, flood zones) can make a property worthless even if you acquire it.
• • Other liens: Check the Registry of Deeds for mortgages, other tax liens, or judgments. Federal tax liens take priority over municipal ones.
• • Ownership: Understand who owns the property. Deceased owners, LLCs, and out-of-state owners each present different redemption probabilities.

Step 3: Contact the Municipality

Call the Treasurer/Collector's office of the municipality where the property is located. Ask:

• • Is the tax title still held by the municipality?
• • Are they willing to assign the tax title?
• • What is the total amount owed (including fees and interest)?
• • When is the next tax deed sale scheduled?

Step 4: Acquire the Lien or Attend the Auction

There are two main paths:

Step 5: Wait (or Foreclose)

If you acquired a tax title assignment, you have two outcomes:

• • Owner redeems (most common): The property owner pays you back the full amount plus 16% interest. This is your profit. Most owners redeem within the first year.
• • Owner doesn't redeem: After the redemption period, you can file a petition with the Massachusetts Land Court to foreclose the right of redemption. If successful, you receive a deed to the property.

Key Numbers to Know

Common Mistakes to Avoid

• • Not checking for environmental issues. A contaminated property can cost you more in cleanup than it's worth.
• • Ignoring other liens. A first mortgage, IRS liens, or condo association liens can complicate or diminish your investment.
• • Overpaying at auction. Set your maximum bid based on research, not emotion. Walk away if the price exceeds 70% of market value.
• • Not budgeting for legal fees. Land Court proceedings require an attorney. Budget $2,000-5,000 for foreclosure legal costs.
• • Assuming all liens are equal. A $500 lien on a $400,000 property is very different from a $50,000 lien on a $60,000 property.