Tax Lien Foreclosures

To understand tax lien foreclosures it is first necessary to understand what is meant by a tax lien. The owner of a property is held responsible for payment of the taxes even if the previous owner had left it unpaid. It means tax liens on real estate runs along with the land. There is no escape from it.

In the case of tax lien foreclosures, the payment may be made by the owner, or as in majority of the cases indirectly by the entity that holds the mortgage, by making use of an escrow account. When property tax falls due, the tax authorities send notices both to the owner as well as to the mortgage holder. Even without the owner having an escrow account the mortgage company will get the notice of tax defaults. The lender will now put pressure on the borrower to clear dues. The danger of tax lien foreclosures on the mortgage company is that the tax authorities can sell the property and realize the dues.

In the case of the property being sold by the owner before the government body takes recourse to tax lien foreclosures then the new buyer has to clear the dues. A title search will show up details of tax payments. So tax lien foreclosures means that the taxing authority forecloses on the unit to realize dues.

Tax lien foreclosures procedures vary from one state to another. If taxes are not paid within a certain specified time (even after receipt of many notices) the unit is seized and sold at a foreclosure sale. These are instances of tax lien foreclosures. In other states instead of tax lien foreclosures the lien may be offered to those who are investing as tax lien certificate. This will give the investor the right to foreclose or proceed with tax lien foreclosures as a tax lien sale.

Many have heard about foreclosures but do not know much about tax lien foreclosures. What are tax lien foreclosures? Buyers of property are required to pay property tax. Usually the lender adds the property tax to the mortgage amount. These payments are broken up in installments. Property taxes can be paid either annually or quarterly. If property taxes are not paid then the government takes recourse to tax lien foreclosures. With the tax collected the government functions and engages in a variety of activities throughout the community like maintaining parks, roads, fire fighting and police force etc.