Sale Type: | Tax Lien Mortgage Foreclosure, then Town Sale |
Interest Rate: | Set by each town |
Bid Method: | Set by each town |
18 months from lien filing | |
Sale Date(s): | Set by each town |
State Statute(s): | 36 M.R.S. §§ 942, 943 and 943-C |
No | |
State Website: |
Maine does not sell tax deeds at a county auction, and it does not run a typical tax lien certificateA legal document issued by a government authority when a property owner fails to pay property taxes, granting the certificate holder a lien on the property. auction. Instead, a town records a tax lien mortgage against the property. If the owner does not pay, the town takes title automatically and later sells the property. This guide explains how the process works, so you know what to check before you pursue Maine tax deeds or any foreclosed property in the state.
How a Maine Tax Lien Mortgage Starts
When property taxes go unpaid, the town’s tax collector sends the owner a written demand. The owner has 30 days to pay. If the taxes are still unpaid, the collector records a tax lien certificate at the county registry of deeds. Under 36 M.R.S. § 942 and § 943, recording the certificate creates a tax lien mortgage in favor of the town.
Key points:
The lien takes priority over other mortgages and liens on the property.
The town holds the lien, not a private investor.
The town has no right to possess the property until the redemption period ends.
The 18-Month Redemption Window
The owner has 18 months from the date the lien is recorded to pay the taxes, interest and costs. Paying in full ends the process, and the town records a discharge of the lien.
If the balance is not paid within 18 months, the lien is foreclosed automatically. No court case is needed. The town must send written notice to the owner and to each record mortgage holder between 30 and 45 days before the foreclosure date. If a required notice was not sent properly, the person who missed it keeps a limited right to redeem.
How Towns Sell the Property After Foreclosure
Once the redemption period expires, the town owns the property. If it does not keep the property for municipal use, it follows the sale process in 36 M.R.S. § 943-C:
At least 90 days before listing, the town sends the former owner written notice by certified mail and first-class mail.
The property is listed through a licensed broker or agent who is not a town officer or employee.
The buyer receives a quitclaim deed. A quitclaim deed transfers whatever interest the town has, with no promises about the title.
The town aims to sell at the highest price it can get within 12 months of listing. If that does not work, it may use another method its voters have authorized.
Sale methods, prices and timing vary by town. Contact the town office or tax collector to find out what is for sale.
What Happens to Surplus Money
Maine requires the town to pay the former owner any sale proceeds above what is owed. That includes the back taxes, interest, and the town’s costs of the lien, foreclosure and sale. The town must give the former owner a written accounting on request. This matters for buyers, because it shows the sale is meant to recover the town’s costs, not to take the owner’s equity.
What This Means for Investors
In Maine, the opportunity is buying a foreclosed property from a town, not earning interest on a lien. That makes it closer to the tax deed side of investing than to the tax lien certificate side. A tax lien is a claim on the debt and earns interest. A tax deed transfers the property itself. In Maine, the town forecloses on the lien first and then sells the property by quitclaim deed.
Returns are not fixed in this process. Price, condition and title all depend on the individual property, and all investing involves risk.
What Investors Should Check
Before you bid on or buy any property from a Maine town, do your own due diligenceThe research and investigation process an investor conducts before purchasing a tax lien or tax deed to evaluate the property and assess risk.:
Run a full title searchAn examination of public records to verify a property's legal ownership and identify any liens, encumbrances, or other claims that may affect the title., since the deed is a quitclaim deed.
Confirm the lien was properly recorded and that every required notice was sent.
Ask the town how it sells, and whether any sales are scheduled.
Check for unpaid sewer, water or other municipal charges on the property.
Review the tax rules in your own state on the tax lien states vs. tax deed states map.
This page is for education only and is not legal or financial advice. Statutes change, so confirm the details with the town and a qualified attorney before you invest.
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