Let me preface this by saying, I have not bought a lien yet or a foreclosure, I have gone through the motions (after making peace with myself that it can be done ethically, a topic worth a separate post). I have talked to people at city hall who have, to instuctors, but I find the whole process daunting.

After taking several courses on tax liens (Illiinois is a lien state), I came away with the knowledge that successfully purchasing a tax lien (meaning the owner did not heed further notifications to pay)-any outstanding mortgage the owner has, is forgiven by the bank, and not assumed by the owner who purchased the property with the tax lien. A lot of people don't know this, and refuse to believe it. Tax liens take precedence over mortgages.

The problem I found is researching liens that are not forgiven, like environmental liens-and also assuring that the property you plan to purchase really exists-only by actually going to city hall to look up records and driving to the property and seeing it can you be sure, that part is easy. Tedious, but important.

Now here is my burning question, why take the risk to buy a foreclosed property? When you go to a foreclosure auction, you do not know if the tax lien was purchased unless you hve researched the property before hand. So if you buy a foreclosed property and thereby agree to pay the bank-you have just made the bank happy, but will not own the property if the tax lien was purchased (got this from a foreclosure class that takes you to auctions and shows you how to research at city hall).

So, my concluson is tax liens is a cleaner way to purchase property. However, the research involved in finding a property is huge-I would only buy over-the-counter after researching-not at a tax sale auction since Chicago has a bid-down procedure.

I know states vary-but I also know that many of you have more real life experience here, not from classes. My husband teases that I need a PhD before I try something...  Interested in your feedback!