taxes
Tax Lien
A government claim against property for unpaid taxes, taking priority over most other liens including mortgages.
In depth
Tax liens arise from unpaid federal, state, or local taxes. Property tax liens attach to the specific property and have super-priority over mortgages, contracts for deed, and most other claims. Federal income tax liens (NFTLs) attach to all real and personal property of the taxpayer. Misconception: tax liens do not always lead to foreclosure; many are paid before reaching the sale stage. Practically, in seller-financed deals, the seller and lender must monitor the buyer's tax payments. Tax sales can extinguish the seller's interest if the buyer fails to pay property taxes for several years. Tax lien certificates are tradeable in some states, and tax sale buyers may acquire properties at deep discounts. Always verify taxes are current at closing.
Educational content only. Definitions reflect typical usage in US owner-finance and FSBO transactions; statutes and case law vary by state. Consult a licensed real-estate attorney for fact-specific guidance.