CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE?
Can a tax lien prevent you from buying a house? Tax liens on a property aren’t usually what people look for when searching for a new home! Find out what the rules say about this!
So, you’ve found the perfect house, and maybe you’re under contract to buy it. You found out the house has a tax lien on it. Can a tax lien prevent you from buying a house? You’re going to find out, and I think you’ll be pleasantly surprised.
Today I’ll answer your question, “Can a tax lien prevent you from buying a house?” and I’ll show you an exceptional way to make extra income part time, working 5-10 focused hours a week.
Also, I have a free gift for you. This is a valuable gift that will show you the inside secrets of tax lien certificates and the huge profits to be made in tax deed properties.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – AUCTION RULES
So let’s get started. Can a tax lien prevent you from buying a house?
Over the past 30 years, I’ve been to dozens of auctions, some were tax lien certificate auctions, and others were tax defaulted property auctions where the auctioneer sells one property at a time usually for pennies on the dollar.
Prior to the auction, it’s wise to review the auction rules, which can be different from state to state and even county to county. The state legislature makes the rules within the state, however, the counties interpret them differently.
To complete the auction process, the county, in many cases, will hire the sheriff’s department to make sure that everyone in the room follows the rules.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – THE BUYER
In some states, the auction rules may stipulate that no buyer will be allowed to purchase if they owe money or are delinquent on taxes in another jurisdiction within the state.
I’m not an attorney or a CPA. I do know that if someone defaults in one jurisdiction, the state will share knowledge and not allow that bidder to purchase.
My point is, the auction rules are clear. However, if you have questions, most counties will employ a county attorney. Otherwise, you’ll need to spend time learning the rules, or head over to your local library and read the statutes.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – TAX LIENS
If you’re attempting to buy a house, and you know it has a tax lien, that should not present a problem. Prior to the purchase, you can stipulate, or require, that the tax lien be paid before you complete the purchase.
The tax lien is not a problem for the purchaser. However, all parties will acknowledge it because a tax lien is a cloud on the title. In other words, it’s an encumbrance, a burden, that must be paid prior to the transfer of the deed.
Can a tax lien prevent you from buying a house? The short answer is that you can purchase the house and require the proceeds from your deposit or bank loan pay off the tax lien.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – TITLE ENCUMBRANCES
Without getting too complicated, it’s not unusual for properties to have tax liens and other encumbrances.
Buyers may search the title. Companies can research the title. For example, a title company or an escrow office can do this. Or a bank may search the title and find liens prior to the transfer of the property.
Those liens will be paid, or in the vernacular of the law, the liens in default will be cured.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – PROPERTY TRANSFER
The transfer of property is not complicated. It’s not usual for properties to have many liens which are burdens on the title.
The proceeds from the buyer will more than likely pay off all of these liens, and the seller will get less money, however, the liens will be cleared.
This is easily accomplished by closing agents, individuals, and attorneys at law.
Each purchase is different. Each title report is different. The objective is that, as a purchaser, you want clear title, meaning no liens on the title. No cloud on title is a reference to no liens.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – TAX DELINQUENT PROPERTY
Before I finish I do want to mention a profitable business I discovered 30-years ago that involves tax lien certificates and tax defaulted property.
These are in most cases, perfectly good properties that may be slightly used and abused, but the property owners failed to pay the property taxes.
The local county will seize, will confiscate, those properties and recycle them back into the marketplace and most importantly, return the property back to the tax roll.
Since the property owner has defaulted on property taxes, the county will produce and deliver numerous notices of default explaining the consequence which is forfeiture.
Then the county confiscates the property, and ultimately the county treasurer will auction the seized property to the highest bidder at a public auction.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – TAX DEED AUCTIONS
Many properties are sold at tax defaulted property auctions for pennies on the dollar.
Tax defaulted property auctions, also called tax deed auctions, usually start the bidding at very close to the delinquent back taxes and sell them with no mortgage.
This process of confiscation takes place in approximately half of the counties in the United States.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – TAX LIEN CERTIFICATES
The other half of the counties are more benevolent and lenient.
These lenient counties allow the property owner to stay on the property. However, the county treasurer will issue a tax lien certificate which is a burden on the property title.
Tax lien certificates may be purchased by anyone, and the certificates pay an outrageous interest rate to the purchaser. The rates could be 16%, 18%, 24%, and I’ve seen many at 36%.
The tax lien certificate buyer does not get immediate possession of the property. However, the buyer controls the property. No sale or refinancing will be allowed on that property until the tax lien certificate is paid in full.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – TAX SALES
The county treasurer has power and authority from the state legislature to levy property taxes and to collect those taxes.
If the taxes remain unpaid, the county treasurer is authorized to confiscate and resell the property at a public auction, also called a tax sale, to the highest bidder.
This business has been the law in the United States for over 200 years.
CAN A TAX LIEN PREVENT YOU FROM BUYING A HOUSE? – BARGAIN REAL ESTATE
Bidders at tax defaulted auctions regularly receive discounts of 60%, 70% and 80% below the tax assessed value.
Additionally, the county treasurer has deleted, wiped out, extinguished from the county records, any mortgage on the property.
If you want to learn more about the secrets of tax lien certificates and the big profits you can make in tax defaulted property, I have a free mini course for you. This is a free gift from me especially for you.
We hope you enjoyed Ted’s lesson, “Can a tax lien prevent you from buying a house?”
If you’re delinquent on taxes in another jurisdiction within the state, then it is possible that you may not be permitted to make a purchase at a tax defaulted property auction. It depends on the auction rules.
Otherwise, if you want to buy a house that has a tax lien on it, this shouldn’t be an issue. You can insist that the tax lien be paid off before the purchase is completed.
Issues that cloud the title, like tax liens and other encumbrances, are rarely a problem for the buyer, as long as you are aware of them and insist on a clear title prior to the transfer of the deed.
Here is a little-known investment opportunity. A great place to purchase a tax lien property is at a tax sale. Some states sell tax lien certificates and other states sell tax deeds at these tax sales, which are public auctions.
At a tax deed auction, properties that were seized by the county due to nonpayment of taxes are sold for pennies on the dollar, and without a mortgage.
The bidding starts at around the amount of back taxes owed, which is usually only a small percentage of the assessed value of the property.
At a tax lien certificate auction, you don’t get immediate possession of the property. What you get is an excellent passive investment that pays a high rate of interest and is secured by real estate.
95% to 97% of tax lien certificates are redeemed, meaning you get all your money back plus the interest, which could be 16%, 18%, 24%, and even as high as 36%. If you don’t get paid, then you get the property without a mortgage.
If you’d like to know more, there’s no one more qualified than Ted Thomas, America’s leading authority on tax lien certificates and tax defaulted property investing, to teach you how to do this.
Ted Thomas is the only one who provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal one-on-one coaching.
If you’d like to learn how to earn lucrative profits in real estate, you can get started now at no cost by taking advantage of Ted’s FREE Master Class. This life-changing mini course is about 1-hour of streaming video.
Learn today from the comfort of your home how to earn outrageous interest rates via America’s safest investment and how to purchase properties for cents on the dollar for quick resale. Make your dreams of financial independence come true! You owe it to yourself.
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