During the process of buying a home, you might find out that a property you have your heart set on has a tax lien. According to U.S. News & World Report, tax liens occur when the previous homeowner did not pay annual taxes for the property. If the seller failed to pay the money owed, it can become your responsibility once you become the owner.
A tax lien is concerning, but it does not mean you must look for a new place to call home. Here are some steps you can take if you discover a home you would like to buy has a tax lien.
Secure title insurance early
You should have title insurance in place well before the closing. The title insurance company will search through documentation involving the property to look for any potential problems, including liens. This prevents surprises during closing if a tax lien was somehow missed previously. Additionally, the title insurance company will cover the costs of liens as a result of the agreement you have with them.
Consider the implications of multiple liens
Liens can also occur if a homeowner failed to pay for renovations or repairs. When there are multiple liens, it is natural to have concerns about the condition of the house. This is why home inspections are so crucial.
Remember, any problems with the property, financial or otherwise, become your responsibility as owner. If the inspection returns questionable results, you must discuss them with the seller to potentially adjust the purchase price for the property.
Once you own the property free and clear, do not make the same mistakes the previous owner did. Pay taxes on time, budget repairs and renovations wisely, and maintain your new home to ensure years of enjoyment.