Introduction
Louisiana’s tax sale system is undergoing significant changes, set to take effect on January 1, 2026. These updates aim to simplify the process, eliminate outdated practices, and create a more investor-friendly tax sale environment.
For investors, these changes introduce a new bidding system, enhanced return opportunities, and a structured foreclosure process. Understanding these updates is crucial for anyone looking to invest in Louisiana tax liens or transition into tax deed acquisitions through foreclosure.
Key Changes to Louisiana’s Tax Lien Sales in 2025
From Ownership Bid-Down to Interest Rate Bid-Down
Previously, Louisiana operated under an ownership bid-down system, where investors bid on a percentage of ownership in the property. This created title complications and made the process cumbersome.
Starting in 2026, Louisiana will transition to a bid-down interest rate system, similar to other tax lien states. The bidding will start at 1% per month (12% annualized) and can be bid down to a minimum of 0.7% per month. This creates a more transparent and competitive investment environment.
New Redemption Period Procedures and Investor Benefits
Louisiana maintains its three-year redemption period, allowing property owners time to reclaim their property by paying delinquent taxes, penalties, and interest. However, the process is now more structured, and investors benefit from:
- A fixed 5% penalty on delinquent taxes (assessed after 90 days of delinquency).
- A requirement for investors to send redemption notices, ensuring all parties are aware of potential foreclosure.
- Reimbursement of redemption period due diligence costs (up to $500 per property).
Enhanced Returns on Subsequent Tax Payments
A major improvement for investors is the treatment of subsequent tax payments (subs). Previously, investors received only 1% per month interest on these payments, with little incentive to cover additional delinquent taxes.
Under the new system, investors will receive:
- 1% per month on subsequent tax payments
- An additional 5% penalty on each subsequent payment
This change significantly increases the return on investment (ROI) for long-term tax lien holders.
Introduction of Judicial Foreclosure for Tax Liens
One of the most critical changes is the introduction of judicial foreclosure for tax lien investors. After the three-year redemption period, lien holders can initiate foreclosure through a court-supervised process, similar to a mortgage foreclosure.
Key aspects of this foreclosure process include:
- Investors must provide proof of proper notification to all interested parties.
- Property owners can still redeem the lien until the foreclosure sale by paying all outstanding taxes, penalties, and foreclosure costs.
- Any surplus proceeds from the foreclosure sale will be allocated to the property owner, ensuring compliance with Tyler v. Hennepin County.
Impact on Redemption and Termination Price Payments
A new concept introduced is the "termination price." This applies after the redemption period ends. If a property owner wants to stop foreclosure, they must pay the full termination price, which includes:
- The original tax lien amount
- Accrued interest and penalties
- Legal fees and court costs (recoverable by investors)
This provides a final opportunity for redemption while compensating investors for legal expenses.
Statute of Limitations for Foreclosure Actions
Louisiana previously had no time limit for enforcing tax liens. Investors could theoretically foreclose decades later. Under the new law:
- Investors must initiate foreclosure within seven years of the original tax lien sale.
- If an investor fails to act within this period, the lien becomes unenforceable.
This change ensures timely resolution of delinquent properties while protecting investor rights.
Post-Redemption Process: How Investors Secure Property
Under the new system, investors who foreclose on properties will receive a deed through judicial sale, rather than relying on a quiet title action. This eliminates legal uncertainty and ensures a clear path to ownership for those seeking tax deeds.
Adjudicated Property Process: What Happens to Unsold Tax Liens?
If a tax lien does not sell at auction, it becomes adjudicated property, meaning it is held by the parish (county).
Changes to adjudicated property sales include:
- These properties will no longer be relisted in future tax lien sales.
- The state is focusing on resolving these properties through the foreclosure and judicial sale process.
- A more standardized system is being developed to dispose of long-term delinquent properties.
This reform helps clear out unmarketable properties while maintaining a structured tax lien system.
How Louisiana’s Tax Sale Overhaul Compares to Other States
Compared to states like Florida and Georgia, Louisiana is now:
- More investor-friendly with structured foreclosure options.
- More predictable with a clear timeline for foreclosure and redemption.
- More competitive due to a lower minimum bid-down interest rate.
This shift aligns Louisiana more closely with established tax lien investment states, making it an attractive market for experienced and new investors alike.
Maximizing Returns with Louisiana’s New Tax Sale Process
How Interest Rate Bid-Down Affects Investment Strategy
With the transition to an interest rate bid-down, investors should:
- Target properties with high likelihood of redemption for quicker returns.
- Analyze bid-down trends to determine competitive interest rates.
- Factor in the 5% penalty to assess total return potential.
Recovering Costs: Due Diligence and Legal Reimbursements
Investors can recoup due diligence costs by:
- Submitting proof of proper redemption notifications to the tax collector.
- Claiming legal fees (minimum $2,500 or 25% of delinquent taxes) during foreclosure.
The Role of Smart Mail and Targeted Notifications in Redemptions
Using targeted notifications increases redemption rates and investor profitability. Smart Mail services ensure that:
- Property owners and interested parties receive notices at valid addresses.
- Investors comply with legal requirements, reducing nullification risks.
- Early redemptions occur, leading to faster ROI.
Legal Considerations: Attorney Fees, Foreclosure Costs, and Compliance
Investors can recover legal costs if foreclosure is necessary, but must:
- File within the seven-year statute of limitations.
- Provide proper notice to interested parties.
- Ensure compliance with judicial foreclosure requirements.
Why Louisiana is Now More Attractive for Tax Lien Investors
The 2025 updates make Louisiana’s tax sale system easier to navigate, more profitable, and more structured. Investors now benefit from:
- A clear foreclosure process to obtain property.
- Higher returns on subsequent tax payments.
- Legally protected cost recovery for due diligence and legal fees.
For investors who avoided Louisiana due to complexity, now is the time to reconsider this market.
Conclusion – What This Means for Tax Lien Investors
The 2025 Louisiana tax sale reform simplifies the investment process, improves return potential, and creates a structured foreclosure path.
By transitioning to an interest rate bid-down system and introducing judicial foreclosure, Louisiana now aligns with other top tax lien investment states. Investors will find higher redemption incentives, better-defined legal processes, and more predictable outcomes.
Next Steps for Investors
- Understand the new bidding system and plan competitive strategies.
- Prepare for structured foreclosure options if properties do not redeem.
- Utilize due diligence tools to maximize cost recovery and compliance.
Also, if you enjoyed the content and interview with Stephen Morel, check out the rest of our interviews with him at the links below.
- Louisiana Tax Sale Changes Are Coming: What Investors Need to Know in 2024
- Worst Case Scenarios when Figuring Out Who to Notice with Stephen Morel
- The Journey of Bid-Down Ownership to Bid-Up Premium Bidding in Louisiana with Stephen Morel
- Louisiana's Legal Landscape Post Tyler v. Hennepin
- Expert Follow Up Interview on Louisiana with Stephen Morel
- Expert Interview with Stephen Morel on the Louisiana Tax Sale Process
📢 Subscribe to our podcast for in-depth discussions on tax sale investing: Tax Sale Insiders Podcast
🎥 Watch expert interviews and updates on our YouTube channel.
