Tax Liens
Tax liens are issued on property in order to secure payment of owed taxes. When agency has issued a tax lien, they have a legal right to control the property and any property the delinquent tax payer will own in the future unless the tax is repaid. In the case of delinquent federal taxes like the income tax, the federal government will issue a federal tax lien with which they legally control your property until the taxes are paid. Tax liens may also be issued for real property or personal property taxes by any body owed taxes (local, state, and federal governments).
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Tax liens remain on the property that they arose from, meaning that you are responsible even if the delinquent tax payer has moved out. The property owner is responsible for paying the delinquent tax to relieve the tax lien even if it is not specifically his debt. In this way, tax liens run with the land - so be aware of entering into tax liens when purchasing a house.
Issuing bodies are legally obligated to inform the debtor of unpaid debts before issuing a tax lien. Debtors will be informed of the owed money and will only receive a tax lien through refusal or failure to pay the owed money in a reasonable amount of time. Once released, the issuing body is legally obligated to notify the debtor that a tax lien has been issued within a reasonable amount of time. Generally, several notices are given to the debtor and only after several attempts to collect the owed debt will the issuing body act to seize property through the use of a tax lien.
Repayment of debts required to relieve a tax lien are most often paid directly by the indebted property owner as a large lump sum or in the form of a bond. Repayment is possible by the debtor at any time between receiving the delinquency notice and home foreclosure but should occur as fast as possible. Mortgage companies will often pay the debt using an escrow account in order to protect the value of the property's mortgage. The mortgage company will demand payment from the holder of the mortgage after paying the owned amount based on their own procedures and regulations. Repayment of owed tax debts may also occur as part of the closing cost from selling the delinquent property.
Procedures surrounding tax liens vary from state to state but most undressed liens result in foreclosure, legal seizure and sale of the property at issue. Tax liens are a deficit to your credit rating and will drag down a credit rating until resolved.
