Home Tax Lien: There Could Be More Than One

A home tax lien is a judgment against a homeowner who has not paid his property taxes to the county in which he lives.  The home tax lien gives the county the right to foreclose on the property and eventually sell it if the homeowner does not satisfy the tax debt.  A home tax lien can also be held by the state or federal government for non payment of taxes.  While much the same, there are some differences in these types of home tax liens.

•    County Home Tax Lien:  Every county assesses property taxes to homeowners in their jurisdiction.  If the homeowner fails to pay these property taxes the county will place a home tax lien on the property, which essentially gives them the right to sell the lien or even to foreclose on the property and sell it at auction after a specified period of time.  The county home tax lien supersedes any other liens placed on the property by banks or contractors who have loaned money to the homeowner using the property as collateral. 
•    State Home Tax Lien:  Non payment of state taxes can result in a home tax lien assessed by the state.  State home tax liens stand above county home tax liens in that if the county was to sell their lien off to a private investor but the state also holds a lien, then the state still has the legal rights to the property. 
•    Federal Home Tax Lien:  A tax lien against a home held by the federal government or IRS is the daddy of all home tax liens.  Non payment of federal taxes allows the IRS to attach any and all personal assets, usually beginning with your home.  A federal home tax lien supersedes all other liens on a property. 

What does this mean to a private investor considering purchasing a tax lien certificate?  It means that the certificate could cost much more than he paid for it if there are home tax liens assessed by higher authorities.  Those will need to be satisfied as well before the investor can take ownership of the home.  Before placing a bid on a home tax lien certificate, be sure to do a title search of the property to ensure that there are no additional liens on the home.  It would be a shame to tie up your hard earned money on a home that could be taken from you by a higher authority because you didn’t do your research.
 

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