The most common form of tax lien is that placed on real property. Tax liens placed on real property differ from personal property tax liens in that real property tax liens attach to the home. So, if you decide to sell your home, that unpaid and delinquent tax remains with the house after the sale. The new owner will then be responsible for the payment of these overdue taxes.

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.

As stated above, mortgage lenders and home owners will both be served a notice regarding the real property taxes when these taxes become delinquent. When this happens, often mortgage holders will pay the taxes and then turn around and bill the home owner for the amount paid. This is done because a government tax lien takes precedence over mortgage payments so the mortgage lender often feels it needs to protect its interests.

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.

Typically, federal procedures will dictate the process since most real property liens are federal in nature, such as liens for the payment of income tax or gift tax. If the tax lien is state mandated, the procedures will be determined by the state in which the real estate is located. To avoid this type of scenario, it is best to pay all taxes when they are due and to request a title search if you are considering a real estate purchase.

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