All About Tax Liens
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by: AmberDeanwater.
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Real estate tax liens are the most usual form of tax lien. A significant difference between real estate and personal property tax liens is that a tax lien placed against a piece of real estate will remain with the property. This means that if you purchase a house which has been attached, you will be held responsible for the tax lien if it is not detected prior to closing.
The real property owner and mortgage lender will be served with a notice if taxes become delinquent on the property. A title search is invaluable if you are thinking of purchasing a piece of real estate. The existence of any tax liens will show up on a title search, thereby alerting you to the fact that there are unpaid taxes due.
When a property is sold which has outstanding taxes due, any lien against the property will normally be paid from the proceeds of the sale as a portion of the closing costs. If a tax lien is not detected prior to the sale, the delinquent tax will pass to the new owner.
Sometimes mortgage holders will pay the late taxes when they receive the notice of taxes due and then will invoice the home owner for the amount paid. Mortgage holders will do this to protect their interests because a governmental tax lien outweighs the mortgage payment due to the mortgage holder.
In the event this doesn't happen, there are several different ways to make overdue tax payments in order to remove the lien from the property. The home owner can decide to pay the tax directly. Alternately, the home owner can decide to use an escrow account.
Normally, the home owner will have a length of time in which to pay the back taxes. If the taxes are not paid within this time period, the property can be seized, subsequently sold, and the proceeds used to pay the delinquent taxes.
Most real property tax liens are federal liens stemming from taxes such as income taxes and gift taxes. Federal law will determine the process related to these tax liens. Likewise, any state tax liens will follow that state's procedures. When all is said and done, it is wise to pay any and all taxes when they come due. It is also smart to request a title search if and when you decide to purchase a piece of real estate.
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