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Beware of Tax Liens on Your Property

If the IRS, state, or local tax bureau realizes that you have an unpaid property tax liability, they will send you a ‘bill’ in the mail. They expect you to pay the amount due or make other arrangements as soon as possible. If you do nothing, they have the right to file a notice of tax lien.

Did you know that tax liens on real estate stay with the land? In simple terms, this means that a new owner can become responsible for debt incurred by a past owner. As a buyer, this is an important note to keep in mind. Most people do not want to get involved with a home that has a tax lien attached to it.

When you fail to pay property tax when it is due and continue to avoid doing so, a tax lien may be placed on your property. At this point, the only way to have the lien released is to pay your property tax bill in full or make arrangements to do so via a payment plan.

There are several ways that you can make payment on a property tax lien:

1. Make the payment directly to the appropriate party, or via escrow through your mortgage. In most cases, the mortgage lender will also receive notice of past due property taxes. In turn, they will pay the tax and then demand payment from the property owner.

2. If an owner sells a property before foreclosure, the property tax lien is often times paid during closing from any profits.

3. Depending on your state, if a property tax lien is not taken care of within a specified period of time, the property may be taken back and sold. If the property is not seized and immediately sold, investors may get involved. In this case, the investor receives a property tax lien certificate and after a predetermined amount of time they can move forward with the foreclosure process.

Are you aware of any tax liens on your property? If you have personally neglected to pay property taxes your answer may be yes. Along with this, there is a chance, albeit a small one, that you purchased a home with a preexisting lien. Fortunately, this is something that is usually caught during the sales and closing process.

It is important to beware of tax liens on your property. If you do not take care of paying back property taxes, things are only going to get worse for you in the future.


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