Connecticut Tax Lien Certificates

Type of Tax Sales in Connecticut Townships

Each of the 13 counties and 242 municipalities in Connecticut are responsible for the sale of Tax Lien Properties. The sale of Tax Lien Properties are usually an “Open bid Public Auction” where the highest bidder gets an unrecorded deed to the property. The interest rate on Tax Lien Certificates in Connecticut is 18%.

When are the auctions held?

Connecticut Tax Lien Property Auctions are usually held in June of every year.

The Tax Lien Process in Connecticut

In Connecticut, Tax Lien Properties are sold when a property owner has failed to pay their taxes for a period of 1 year. After the year lapses, the municipality may auction the property for the taxes outstanding. Each property auctioned has a face value of the following total; taxes owed, interest (probably a year’s worth of interest @ 18%), fees, and other charges due. There isn’t a minimum bid in Connecticut, but the property will not be sold if the minimum bid doesn’t cover the face value.

Most municipalities in Connecticut encumber each Tax Lien Certificate with a “Right of Redemption” period of one (1) year, some municipalities have a redemption period of only six (6) months. But, 2 weeks after a property is sold at auction, the winning bidder must be given a deed from the Tax Collector. This deed remains unrecorded for one (1) year, if the former owner doesn’t redeem the property, then the deed is recorded and the former owner extinguishes all interests in the property. If the former owner does redeem the property within the one (1) year redemption period, they must pay all interest and charges owed on the property. The holder of the unrecorded deed is then awarded the interest payments and charges made while holding the unrecorded deed. If no one bids on the Tax Lien Certificate at the auction then the municipality will hold onto the right to collect interest and penalties against the property. The process of using unrecorded deeds with a one (1) year redemption period is very similar to other states that use Tax Lien Certificates.

Here's an example of how a TLC purchase could work in Connecticut:

Tax Lien Certificate Face Value: $4,000.00

Bid Amount: $4,050.00

Interest Rate: 18.0%

Recording Fee's: $25.00

The investor paid $4,075.00 (bid plus recording fee) for the property and was given an unrecorded deed to the property 2 weeks after the auction. Let’s say the former owner redeems the property after 6 months. The former owner must pay at total of $4,385.00 (face value, interest, and recording fees).