A tax lien is a legal claim placed on a property by the government when an individual or business fails to pay their taxes. It’s important to know what this means if you are purchasing a property, as tax liens can have serious implications for the new owner. Let’s go over the basics of tax liens and why they matter. 

What is a Tax Lien?

A tax lien is involuntary and occurs when an individual or business fails to pay their federal, state or local taxes. The Internal Revenue Service (IRS) is responsible for filing a lien against any delinquent taxpayer, which gives them priority over other creditors in terms of collecting the debt. 

The Effect of a Tax Lien 

When a lien is filed, it effectively prevents the person from selling or refinancing their home until the debt is paid in full. It also allows the IRS to take money directly from any bank account that belongs to the taxpayer and use it towards paying off their debt. Additionally, it will negatively affect your credit score, making it difficult to obtain loans or other forms of financing in the future. 

Dealing with Tax Liens

If you are purchasing a property that has an outstanding tax lien, there are several steps you can take to protect yourself legally. First, you should make sure that all taxes owed on the property have been paid before signing any paperwork. This includes property taxes as well as income taxes owed by previous owners of the home. If there is still an outstanding balance due, you may be able to negotiate with the IRS for a reduced payment plan or even have them waive some of the fees associated with paying off the debt in exchange for prompt payment. It’s also important to consult with an attorney about potential legal issues related to purchasing a home with an unresolved tax lien attached to it. Fleet Title is here for just that!

Tax liens can be daunting and complex matters but understanding what they are and how they work can help protect future buyers from potential financial pitfalls when buying a new home. Whether you're already in negotiations for a house with an existing tax lien attached or just want more information about how these matters work, doing your research now will save you time and money down the line! 

Licensed Florida attorneys founded Fleet Title to bring high-quality, fast, and efficient title services to Florida's residential and commercial real estate markets. Our attorneys have closed real estate transactions for over 25 years. At Fleet Title, you will benefit from our experienced attorneys at the cost of a title agent. To learn more about the services offered in Vero Beach, FL, visit www.fleettitle.com, call (772) 224-3338, or email us at info@fleettitle.com.