Are Tax Lien certificate purchases permissible? In many cities in the US, the state or counties or cities sell tax liens to the public when individual homeowners have defaulted on their taxes to the state, county or city. Is it permissible to buy these tax liens which provide you the right to foreclose and take ownership of the property if the current owner does not pay the taxes. They only allow this after the following: 1) It has been advertised in the newspaper for several weeks 2) After waiting a 6 month period of the owner being notified and not paying the tax lien off and not reclaiming the tax lien certificate from you. More information can be found here. http://en.wikipedia.org/wiki/Tax_lien_sale

Alhamdu Lillah

The Islamic interpretation of the transaction in question is that the federal government or any of its agencies (as the Tax Lien is a federal law as you know) is offering you a house to buy, the price is the dollar value of the Tax Lien, and after certain criteria are matched, like waiting for 6 moths for any possible reclaim from the original owner. Obviously, this transaction is allowed.

The only doubt I have is regarding the justice and the fairness of the federal government in repossessing the property;

Is it fair enough to re-own a house worth tens of thousands of dollars only because the owner defaulted in paying few thousands of dollars property tax!?  With the assumption of the permissibility of such a harsh financial penalty, the transaction is still allowed, but if otherwise, may be staying away from such a business is better and safer for you, because buying these houses could be a sort of helping in oppressing people and taking their homes unjustly.

It should be clearly understood that charging property tax is allowed, but foreclosing the house because of the failure in paying the tax is the concern.