QandAs: Legal

What is a Tax Lien?

Answer:
A tax lien is the government’s patient

method of collecting unpaid taxes. Instead of taking you to collection or sending you bill after bill only to be ignored, the agency that is due the tax money will look for any assets you may own, such as real estate, and file a claim against that asset. The claim itself is called a lien.

If you ever want to sell that asset, you will first have to pay the lien off. The most common form of tax liens are for property taxes and the property that is behind in its tax payments is the property that the lien is filed against.

Property tax liens also generally have an expiration date and depending on the state you live in, that means if you don’t pay the lien off before the required time, the County Tax Collector can take your property from you and sell it to someone else for as little as the value of the tax lien. Additionally tax liens will often show up on your credit report, lowering your ability to get credit. This makes for strong motivation to pay your taxes on time.