What Is A Property Tax Lien?
Thought property liens were only for delinquent taxpayers? Well, they're not.
Almost everyone has at least one. Chances are you have a property lien on your
house right now!
Mortgages are a type of property lien. It is a formal judgment placed on your
home to limit what you can do with it until your total mortgage debt is paid
in full. For instance, you couldn't take a house with a mortgage and just "give
it"to one of your children. It is true, that you can sell a mortgaged home
- as long as the mortgage is paid in full before the title is transferred to
the new owner. In the event you fail to pay your mortgage lender in accordance
with your loan agreement, the lender may use the lien to repossess your house
and sell it either at auction or on the open market to recoup their losses. This is one way people make money with tax lien investments.
But mortgages aren't the only type of property liens available. Here are a
few others:
Property Tax Lien.
Every property in the United States is assessed for its value, and then taxed
on that assessed value to help the local government pay for community services
such as public schools, hospitals, ambulance, fire and police. When a taxpayer
falls behind in paying their tax debt, the taxing authority has the legal right
to lien the property in question, and sell a tax lien certificate held on it
at public auction in order to redeem the lost tax revenue.
Federal Tax Lien.
The Internal Revenue Service (IRS) means business. When you fail to pay your
annual personal or business income taxes, the federal government has the right
to file a lien on any and all personal property (including boats, cars, jewelry,
and more), and real estate you may own at the time of the filing (and that which
you acquire later), in the amount of the tax debt, plus interest and penalties.
Mechanic's Lien.
Homeowner's and businesses who hire contractor's to handle construction projects
must take special care that the general contractor pays all of his subcontractors
who worked on the project, or the property owner may be responsible for paying
them, even if they've already paid for services rendered. When a labor subcontractor
goes unpaid for work on a construction job, they can file a mechanic's lien
on the property to ensure payment in the future - either when the property owner
tries to finance the property or tries and sell it.
Mechanic's liens were instituted as a way to protect simple laborers from losing
income due to unscrupulous real estate investors, and general contractors. Homeowners
doing construction or remodeling work on their property need to be very clear
as to their payment responsibilities for subcontractor work, or risk having
a mechanic's lien placed on their property.
Tax Lien Certificate.
A tax lien certificate is a tax lien placed on your property and sold at auction,
with the understanding that if the current owner pays the lien certificate owner
the debt due, with interest, in a certain amount of time, they may retain ownership.
If they fail to pay the debt by the deadline, the deed is transferred to the
lien certificate holder.
Having a lien placed on your property is very serious. It can damage your credit,
making it impossible to obtain a mortgage, car loan or student financing. It
can also result in the loss of your property if you fail to pay off your debt.
Attorney Tax Lien
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