Most new investors think there are only two ways to buy at a tax sale: lien states, where you earn interest, and deed states, where you buy the property outright. There's a third category that sits in between — and it's where some of the most experienced investors quietly concentrate their capital. Redeemable deed states give you a flat double-digit penalty if the owner pays you back, or the property itself if they don't. Here's how that "heads I win, tails I win" structure actually works.

A note on framing: Tax educator Jay Drexel — creator of the Tax Yields program and a partner in United Tax Liens — has built much of his teaching around this exact mechanism. In his interview "Lien With It, Rock With It: Jay Drexel's Journey From Retail Arbitrage to Tax Lien Investing" (SimpleCFO), he walks through how redeemable structures can pay a flat penalty "in some areas up to 25%." This guide is our own breakdown of the strategy and the states it applies to. Jay Drexel and Tax Yields have not endorsed LienSuite — we're connecting the strategy he teaches to the data work required to execute it.

What Is a Redeemable Deed?

A redeemable deed is a hybrid. When you win at the auction, you don't just get a lien certificate (a claim that earns interest), and you don't immediately get clean, marketable title either. Instead, the delinquent owner keeps a statutory window — the redemption period — during which they can buy the property back by repaying you what you paid plus a penalty.

Two outcomes, both designed to favor you:

The owner redeems. You get every dollar you invested back, plus a flat penalty — often 20% or more — regardless of how quickly they pay. That's the "tax yield."
The owner doesn't redeem. The redemption window closes, you complete the required legal steps, and you take ownership of the property for what amounts to the back taxes.

The critical distinction that trips up beginners: in most redeemable deed states the return is a penalty, not annualized interest. In a true lien state, 12% interest earned over three months is roughly 3%. In a redeemable deed state with a 20% penalty, if the owner redeems on day 30 or day 300, you still collect the full 20%. Early redemption can produce an enormous effective annual yield. That asymmetry is the whole point.

The Five Redeemable Deed States

There are five commonly recognized redeemable deed states: Connecticut, Georgia, Rhode Island, Tennessee, and Texas. They are not interchangeable — the penalty math, the redemption clock, and even when you take title differ significantly. The table below is a high-level orientation; always confirm the current statute before you bid, because legislatures adjust these rules.

State	Redemption Period	Return Structure	When You Get Title
Georgia	12 months (then barment process)	20% flat penalty in year one	After redemption period + foreclosing the right of redemption
Texas	2 years (homestead/ag); ~6 months (other)	25% premium year one, 50% year two	At the sale, subject to redemption
Tennessee	~1 year (varies by county/circumstance)	Statutory interest on the bid	After redemption period closes
Connecticut	~6 months	Statutory interest/penalty on the bid	After redemption period closes
Rhode Island	~1 year minimum	Penalty plus accruing charges	After redemption + petition to foreclose

Georgia: The Flat 20% Penalty

Georgia is the state most associated with this strategy, and for good reason. When you buy at a Georgia tax sale, the owner (and other interested parties) has 12 months to redeem. To redeem, they must pay you the amount you bid plus a 20% premium on that amount. That 20% is flat — it does not matter whether they redeem in month one or month twelve.

If 12 months pass and no one has redeemed, you don't automatically own the property free and clear. You must foreclose the right of redemption — commonly called "barment" — by serving statutory notice on the owner and other parties of interest. Once barment is complete, the redemption right is extinguished and you can move toward marketable title (a quiet title action is often still advisable). Skipping the barment step is one of the most common rookie mistakes in Georgia.

Texas: 25% / 50%, and You Hold the Deed

Texas is the outlier among the five — and arguably the most aggressive structure for the investor. In Texas, the tax deed conveys title to you at the sale, subject to the former owner's right of redemption. You're not waiting on a certificate; you hold a deed from day one.

The redemption terms depend on the property type:

Homestead or agricultural property: a 2-year redemption period. The owner pays a 25% redemption premium in year one and 50% in year two, on top of your costs.
All other property: a much shorter redemption window (roughly 180 days) at the 25% premium.

A 25% premium on a six-month redemption is a staggering annualized return if it happens — and if it doesn't, you already hold the deed. We go deeper on the mechanics in our Texas property tax redemption guide and on how this differs from a pure lien in tax lien vs. tax deed in Texas.

Tennessee, Connecticut & Rhode Island

These three are genuinely redeemable but use returns based more on statutory interest and accruing charges than a single headline penalty, and the procedures vary widely — sometimes county by county. Tennessee typically runs about a one-year redemption window administered through the courts. Connecticut uses a shorter window (around six months) with statutory interest. Rhode Island layers a penalty with accruing charges and requires a petition to foreclose the redemption right before you can take title. Treat the numbers above as orientation only and pull the current statute for the specific county before you commit capital.

Why Experienced Investors Concentrate Here

The redeemable structure has a risk profile that's hard to beat when you do the homework:

The penalty is flat, so early redemptions juice your yield. A 20% penalty redeemed in three months is an ~80% annualized return on that deal. You can't engineer that in a straight interest state.
Your downside is a real asset. If the owner doesn't redeem, you don't lose — you get the property, often for cents on the dollar of market value. The "worst case" is owning real estate at a deep discount.
Less retail competition. Most beginners chase deed-state auctions or well-known lien states. The redeemable mechanics intimidate people who don't understand barment and redemption clocks — which thins the bidding.
Predictable timelines. Unlike a quiet-title-heavy curative play that can stretch for months, the redemption clock is statutory and known the day you buy.

The Risks You Have to Respect

This is not free money. The same features that make redeemable deeds attractive create specific failure modes:

You can buy a worthless parcel. If you take the property and it's a landlocked sliver, an environmental liability, or has senior liens that survive the sale, the penalty you hoped for evaporates. Due diligence on the parcel matters even when you're "just" hoping to collect interest. See our due diligence checklist for tax delinquent property.
Procedure is everything. Miss a barment notice deadline in Georgia, or botch the Texas redemption accounting, and you can lose the property or the premium. These are statutory processes with no mercy for sloppiness.
Capital can be tied up. In a 2-year Texas homestead redemption, your money may sit for the full period before you know the outcome.
Title is rarely instantly marketable. Even after redemption expires, most buyers still want a quiet title action before they'll insure the property.

How to Actually Source Redeemable Deed Deals

The strategy is only as good as your pipeline of properties. The flat-penalty math doesn't help you if you can't find parcels worth bidding on, separate the junk from the assets, and reach owners or heirs. That's the unglamorous half Jay Drexel emphasizes — and where most investors stall.

Step 1: Pull the delinquent rolls early

Counties publish delinquent tax lists ahead of the sale. In Georgia and Texas especially, the best parcels are identified weeks before auction day. Pulling and cleaning these lists by hand, county by county, is doable for one market — but it doesn't scale. LienSuite aggregates pre-scored tax delinquent lists across 389 counties in all 50 states, including Georgia and Texas redeemable-deed counties, so you can screen for the deals worth your time before you ever drive to a courthouse.

Step 2: Score for distress and ownership signals

Not every delinquent parcel is a good redeemable-deed bet. You want properties where either (a) the owner is likely to redeem — meaning they value the property and will pay your penalty — or (b) if they don't redeem, you'd happily own it. LienSuite scores each property on years of delinquency, tax owed relative to value, and ownership signals like deceased owners and heir indicators. A parcel with a deceased owner and tangled heirship is more likely to go unredeemed — which is exactly the scenario where you want to be confident the underlying real estate is worth keeping. (For more on that overlap, see finding deceased-owner property deals.)

Step 3: Skip trace before the sale

Knowing who the owner is — and whether they're reachable — changes how you bid. Owners you can reach may redeem quickly (great penalty) or may sell to you directly before the auction (even better). LienSuite includes built-in skip trace tied to the property record, so you can append phone numbers, emails, and associated addresses without exporting to a separate tool.

Step 4: Verify the statute and the sale rules — every time

Redeemable deed rules change, and county practices vary. Before every sale, confirm the redemption period, the penalty rate, the notice requirements, and which liens survive. The penalty math only works if the procedure holds up.

Redeemable Deed vs. Lien vs. Deed: Which Fits You?

If you want...	Best fit	Why
Pure passive yield, no desire to own property	Tax lien states	You earn interest and almost always get redeemed; rarely take title
To acquire real estate at a discount	Tax deed states	You buy the property outright at auction
High flat penalty or the property — your choice depends on the owner	Redeemable deed states	Flat 20-50% penalty if redeemed; the asset if not

If you're still mapping out where to deploy capital, our breakdown of the best tax lien states by interest rate pairs well with this guide for a full picture of the lien-to-deed spectrum.

Frequently Asked Questions

Does Jay Drexel recommend LienSuite?

No. Jay Drexel and the Tax Yields program have not endorsed LienSuite. We built LienSuite to handle the deal-sourcing and skip-tracing work that any tax sale strategy — including the redeemable deed approach he teaches — requires. This is our connection of his strategy to a data tool, not his recommendation.

Is a 20% penalty the same as 20% interest?

No, and the difference is the whole appeal. A penalty is a flat amount owed regardless of timing. In Georgia, redeem on day 10 or day 360 and the penalty is still 20% of your bid. That makes early redemptions extraordinarily high-yield on an annualized basis, something a simple-interest lien can't match.

What happens if the owner never redeems?

You move to take ownership — but not automatically. In Georgia you must foreclose the right of redemption (barment); in Rhode Island you petition to foreclose; in Texas you already hold the deed and simply wait out the redemption window. In most cases a quiet title action afterward is what makes the title marketable and insurable.

Which redeemable deed state is best for beginners?

Georgia's flat 20% penalty and well-documented barment process make it the most studied entry point. Texas is attractive because you hold the deed from the sale, but the 2-year homestead redemption can tie up capital. Start with the state whose county data and sale procedures you can actually learn well — proximity and information access beat headline penalty rates.

Can senior liens survive a redeemable deed sale?

Sometimes. IRS liens, certain municipal liens, and other encumbrances can survive depending on the state and how notice was given. This is why parcel-level due diligence matters even when your plan is to collect a penalty — a surviving senior lien can wipe out the value of a property you end up keeping.

Start Sourcing Redeemable Deed Deals Today

The redeemable deed strategy rewards investors who show up to the sale already knowing which parcels are worth bidding on — the ones where a redemption pays a fat penalty and a non-redemption hands you an asset you'd be glad to own. That knowledge comes from data, not luck.

LienSuite gives you pre-scored tax delinquent lists across 389 counties in all 50 states — covering Georgia, Texas, and beyond — with deceased-owner and heir signals, built-in skip trace, and a deal pipeline to track every parcel from the delinquent roll through the redemption clock. Start with the free tier and see the deals for yourself.

Redeemable Deed States: The 20-50% Penalty Play Explained