Taxes owed on a plush property are $11K. The parcel is opened for bidding and has a lot of interest because the house is REALLY nice. The bidding goes up to $230K, for a $219K overage. The county takes $11K to pay the taxes owed and holds on to the $219K overage. The clock is now ticking and the owner has one year to pay off the lien (taxes have already been satisfied). During this time, they retain ownership (at least to the degree that they had ownership previously). If they redeem the property within 6 months, he must pay the lien plus 10% ($11K + $1.1K = $12.1K) AND he must pay 10% of the overage (or $21.9K) for a total of $34K to redeem the property. If he redeems after 6 months but before the end of the year, it is the same except the interest on the lien is 15%, so he would get $34,550 instead. The auctioneer said that the interest is simple interest against the amount, so it doesn't have to be annualized or anything like that. If the owner (or any interested party) fails to redeem the lien, then the lien holder can file for a tax deed assuming that they have filed the appropriate notifications to all parties of interest, dotted their i's and crossed their t's. Most investors hire lawyers to take care of the legalities. Tax liens wipe out almost all encumbrances (except any federal liens, which are rare) INCLUDING the mortgage, so usually the investor would end up with a home for whatever they paid for the lien. Oh... and the overage goes to the previous owner (btw, there is an opportunity there to make some money by helping previous owners unite with that money).

Do keep in mind, that this applies to my county. Every county will be a little different. If you are interested in learning more, you might check out taxsalelists.com. I think they offer free training now.