What Is a Tax Deed Sale? (For Homeowners Facing Tax Sale)

If your home is at risk due to unpaid property taxes, understanding tax deed sales—and how they differ from tax lien sales—can help you protect your equity and act fast.

When property taxes go unpaid, local governments have powerful tools to recover the debt. Depending on your state, this may result in either a tax deed sale or a tax lien sale. Knowing the difference is critical—especially if your home is already scheduled for auction.

🔍 Tax Deed Sale vs. Tax Lien Sale: What’s the Difference?

Feature	Tax Deed Sale	Tax Lien Sale
Ownership Transfer	Yes – the property is sold and deed transferred to the buyer	No – investor buys a lien, not the property
Homeowner Rights	Usually lost after sale (some states allow short redemption)	Retains ownership until lien is redeemed or foreclosed
Investor Role	Buys the property outright	Buys the right to collect unpaid taxes + interest
Redemption Period	Often none, or very short	Typically 6 months to 3 years depending on state
Risk to Homeowner	Immediate loss of property	Risk of foreclosure if lien isn’t paid off

In a tax deed sale, the county auctions off the actual deed to your property. The winning bidder becomes the new owner, and you lose all rights to the home unless your state allows a brief redemption period.

In a tax lien sale, the county sells a certificate representing the unpaid taxes. You still own the home, but now owe the investor the taxes plus interest. If you don’t pay within the redemption window, the investor may initiate foreclosure.

🗺️ List of Tax Deed States (as of October, 1, 2025)

These states allow counties to sell the actual property (not just a lien) at auction due to unpaid property taxes:

• Alaska

• Arkansas

• California

• Florida

• Idaho

• Kansas

• Maine

• Michigan

• Minnesota

• Missouri

• Nevada

• New Hampshire

• New Mexico

• New York

• North Carolina

• North Dakota

• Ohio

• Oklahoma

• Oregon

• Pennsylvania

• South Dakota

• Texas

• Utah

• Virginia

• Washington

• Wisconsin

• 
  

Some sources also include Connecticut, Delaware, Georgia, Hawaii, Rhode Island, and Tennessee as redemption deed states, which are similar to tax deed states but offer a short redemption period after the sale.

🛡️ What You Can Do as a Homeowner

If your home is in a tax deed state, you may have limited time to act. Here’s how to protect your equity:

1. Request a Payoff Letter: Get the exact amount owed, including interest and fees.

2. Sell Before the Auction: A fast sale to a cash buyer can stop the auction and preserve your equity.

3. Redeem If Allowed: Some states offer a short redemption window after the sale—know your rights.

4. Work with a Title Company: They can wire funds to the county and ensure all liens are cleared.