The buyer of the certificate pays the outstanding tax and other expenses. He or she must then wait through the redemption period. In order to redeem the property during that time, the delinquent owner must pay the certificate holder the full amount that was paid for the tax certificate, along with interest and sometimes expenses and penalty fees. The interest rate on tax lien certificates is set by each municipality and is often quite high, typically in the range of 15- to 20 percent, and can sometimes be even higher. If the tax-delinquent owner or another party with a possible legal interest in the property (such as an ex-spouse, an heir or perhaps a contractor holding a mechanic's lien) does not redeem the tax certificate within the allotted time, the certificate holder must then initiate foreclosure proceedings. These proceedings are the means by which title will actually convey to the certificate holder.

However, even when foreclosure proceedings are complete, there still may be claims against the property or other problems in getting clear and marketable title. If this occurs, the investor must go to court for a "quiet title" action (which is a court procedure to establish ownership of real property when it's under dispute). If the court's decision favors the certificate holder, then he or she will receive clear title to the property; if it rules differently, he or she will lose the real estate and all money that's been invested in it.

Many people who invest in tax certificates have absolutely no plans to take over ownership of their subject properties. They buy the certificates to take advantage of their high interest rates, with the full expectation that the delinquent owners will redeem them. However, tax certificate holders do face the risk of time and money that would be required to refurbish and resell the property if the owner does not redeem it. But many investors don't look at that as much of a risk considering the very high profit potential in a property bought for no more than the amount of the unpaid taxes.