Tax Liens: What To Look For & What You Can Do
When buying a home, it’s important to look beyond the surface—and one thing you definitely don’t want to miss is a tax lien. A tax lien is a legal claim placed on a property by a government entity when the owner fails to pay property taxes. While this might sound like the seller’s problem, it can quickly become yours if it’s not resolved before closing.
What Could Occur:
- Delayed or Blocked Closing – A property with an unpaid tax lien can’t transfer clear ownership until the debt is paid.
- Title Issues – Tax liens stay with the property—not the owner—so if you buy a home with a lien, you may inherit the debt.
- Foreclosure Risk – If a tax lien goes unpaid, the government can foreclose on the property—even if you’re the new owner.
- Reduced Financing Options – Lenders typically won’t fund a mortgage on a property with unresolved liens, which could derail your purchase.
The Solution
- Get a Title Search – A title company will uncover any existing tax liens during the transaction process.
- Require the Seller to Pay – The seller is responsible for clearing the lien before the sale can close. This is usually handled during settlement.
- Purchase Title Insurance – Title insurance protects you from hidden liens that weren’t discovered during the initial search.
A tax lien doesn’t have to stop your home purchase—but it does need to be taken seriously. With proper due diligence and the right professionals on your side, you can avoid inheriting someone else’s tax trouble and move forward with peace of mind.
Comments
Post a Comment