A property tax lien is a claim placed on property by a government entity as a result of the owner’s failure to pay property taxes. The property tax lien takes precedence over all other liens on the property, including mortgages and mechanic’s liens.
A property tax lien can be created in one of two ways:
- The property owner fails to pay property taxes when they are due.
- The property owner pays property taxes late, and the government entity assesses a penalty.
If the property tax lien is not paid, the government entity can foreclose on the property and sell it at auction to repay the outstanding property tax debt. In most cases, the property tax lien will also attach to any other property that the property owner may own.
It is important for property owners to understand the consequences of a property tax lien, and take steps to avoid having one placed on their property. Some things that property owners can do include:
- Paying property taxes on time.
- Staying current on property tax payments.
- Paying property taxes in full.
- Making sure that property taxes are paid even if the property is sold.
- Ensuring that property taxes are paid even if the mortgage is refinanced.
- Working with the government entity to resolve any property tax liens that have been placed on the property.
- Hiring a tax professional to help manage property taxes and avoid property tax liens.
Property Tax: Digging Deeper
The property tax is a very common method of revenue for local governments all over the United States.
A tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay fines or penalties assessed by a governmental unit against property.
The tax lien arises at the time the taxes become due and payable, even if the property owner is not notified of the lien. The tax lien has priority over all other liens and encumbrances on the property, except for mortgages and home equity loans that were recorded before the tax lien.
Government entities use tax liens as a powerful tool to collect property taxes that are delinquent. The tax lien attaches to the property and not the owner, so even if the property is sold, the new owner will be responsible for paying the back taxes. A tax lien can also act as a deterrent for property owners to keep their property taxes current, as the lien will lower the property’s value and make it more difficult to sell.
If you are a property owner who is facing a tax lien, don’t despair, there are a few options available to you. You can pay the back taxes owed, which will release the lien. You can also negotiate with the government entity to set up a payment plan. Or, you can try to sell the property to pay off the tax lien. However, it will be difficult to find a buyer who is willing to take on the responsibility of paying the back taxes, so you may have to sell the property for less than its market value.
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