Real Estate Tip of the Week: Understanding Tax Liens
Purchasing and owning a home is exciting – until all the legal jargon comes into play.
For the average homeowner, some of the vocab can go in one ear and out the other. With knowledge, comes confidence (and power), so why not brush up on some of the legal homeowner jargon that might affect you?
In this scenario, we’ll be focusing on one major item from the vocabulary list: tax liens.
What it comes down to:
If, for whatever reason you can no longer (or haven’t been) paying our property taxes, the local government can place a tax lien on your home. This is a legal claim that ensures you won’t be able to refinance or sell your home without first paying off the lien.
When closing on your future home, the title and escrow company you work with would find the lien on the property you’re trying to purchase. From there, the title and escrow company would work with the current owner to settle the lien before you move in.
How to Avoid a Property Tax Lien
A great idea might be placing your property taxes in escrow. While this isn’t required, it can still be a beneficial option to prevent any unnecessary stress in the future. By placing your taxes in escrow, you’ll be paying your property tax bill every month, but your lender handles the actual payment.
You can also apply for a homestead exemption – if you quality, it can help cut down on your annual property tax bill.
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