But more often than not, a tax lien on a property doesn’t need to get in the way of your perfect home purchase. It’s simply a matter of doing your homework on the reason for the lien, the amount it’s for and whether your agreed-upon sale price will take care of seller’s debt.

What to do if you find a lien on your property?

If you do find a lien on your property (or one you want to purchase), don’t panic. If the lien is paid off already, you may just have to contact the appropriate party with proof in the form of a lien release. But if it hasn’t been paid, you’ll need to sort this out before your home sale goes through.

What are the different types of tax liens?

Tax liens: Tax liens are filed due to unpaid taxes, including local property tax liens and those filed by the IRS for missed federal tax payments. Judgment liens: Judgment liens result from court cases in which it was ruled that you owe money to the other party.

What happens if there is a title lien on a house?

Without title insurance, any undiscovered lien is your responsibility. If you did not purchase title insurance, unpaid property taxes or a roofer who has yet to be paid for work on the house with a lien that wasn’t found before closing becomes your responsibility.

How do you get a return on investment on a tax lien?

There are two ways to get a return on investment from a tax lien. The first is through interest payments. The second is through potential ownership of the property. When you purchase a lien the property owner is required to pay back the entire value of the lien plus interest.

What’s the difference between a tax lien and a sale?

Both represent sales of homes with unpaid property taxes. A tax lien sale is when the liens are auctioned off to the highest bidder. The highest bidder now has the right to collect the liens, plus interest, from the homeowner.

What to do before buying a tax lien certificate?

Before buying a tax lien certificate, decide where you want to invest in a tax lien, then research the laws regarding liens in that specific county, since they vary from area to area. Once you’ve done your research, get a list of properties for sale from the county treasurer, investigate potential properties, and make a list of the ones you want.