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What you need to know about property tax liens

On Behalf of | Oct 20, 2021 | Real Estate Law

Generally, a lien is a legal right or claim of one person against another’s property to secure the payment of a debt or fulfillment of other obligations. Liens are commonly placed on properties by creditors so that they can collect what is owed to them. They can also be removed, thus giving you, the owner, full title to the property.

You are limited to what you can do with the property with a lien, like selling it. In addition, if you fail to fulfill your financial obligations, the creditor can choose to dispose of the property and recoup what you owe them. Liens can be placed by any party you owe money to, including a government agency or a contractor.

What property tax liens entail

When homeowners or landowners fail to honor their property tax obligations, the municipal government has a right to place a lien on their property. It means that the owner cannot refinance or sell the property without clearing outstanding property taxes. Usually, the government issues a tax lien certificate when the lien is placed on your property. The document contains the details of the property, amounts owed and any interests or penalties accrued. The municipal government can then auction these certificates to investors who pay an additional premium plus the outstanding amount, allowing the government to recoup its money.

The best way to get rid of property tax liens is to clear any debts you owe the taxman in full. The lien will then be released after you have settled the debt.

Learn more about liens to safeguard your interests

Not all liens are bad, like the ones entered into voluntarily. However, other liens can be damaging to your credit rating and finance, which is why it is important to get to know more about liens if you are a property owner or aspiring to be one. Depending on the liens in place, it may save you a lot of money or even your property.