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What is a Property Lien, and How Does it Stop Your Home Sale?

Monday, March 15, 2021

One of the hallmarks of success in life is becoming a homeowner. With that, comes a ton of responsibilities, like making necessary repairs and keeping your home in good shape. It also means you'll have to pay property taxes on your new home.

Unpaid property tax can wreak havoc on your ability to keep or sell your home. Want to learn why that is? Read on to learn how a property tax lien can become a major headache.

Equity Matters

The amount of equity you have in your home will have a major impact on your ability to sell it with a tax lien. 


There are many different types of liens that can be put on your home. In fact, even your mortgage is a type of lien. When it comes to liens, however, tax liens take priority and eliminate other liens on the property, including your mortgage.

This means that if you want to sell your home, the offer you receive must be enough to cover the cost of the tax lien and what is remaining on the mortgage. If you have enough equity in your home, then you can satisfy both liens with the sale. If you don't have a ton of equity, however, you will have to come up with the money to cover the taxes to make the sale go through. 

Watch Out for Tax Sales

What happens if you let a tax lien sit on your house instead of trying to sell or pay it?

Tax liens can cause you to lose your home in a couple of different ways. First, the local tax office can auction off your home and use the proceeds to cover the lien. This is known as a tax deed sale, and you are notified in advance of the sale so you have the opportunity to repay the taxes.

Your taxing authority might also collect on your taxes by holding a tax lien certificate sale. This allows the tax authority to sell your lien to another party. If you don't repay the lien in full, then the buyer has the ability to gain ownership of the property by foreclosing.

Check with Your Lender

Mortgage lenders have an interest in making sure that your home isn't foreclosed because of unpaid taxes. To help prevent this, many lenders will pay the taxes and then charge the homeowner for them. If you do not reimburse your lender, then they may begin the foreclosure process as if you had not been paying your mortgage.

Do You Have a Lien from Unpaid Property Tax?

No one buys a house and expects that they'll be unable to pay for the property taxes. Unfortunately, you can't always control when you'll fall onto hard times. If you have unpaid property tax, it's critical that you take steps to resolve them so you don't lose your home or the ability to sell it.

Do you need help making sure the title on your home, or the home you're buying, is free and clear? Contact us today to learn how we can help you with your real estate transaction or title insurance.

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