Property & Tangible Taxes
Our Municipal Lien Search Report includes the three most current property tax years. Any prior unpaid years for taxes or tax lien certificates issued by the county against the property are also provided within the report.
Tangible taxes are common for properties used in commercial businesses or for rental properties. Depending on the type of property being purchased and its current use, tangible taxes may or may not be included.
Why are Taxes Included in a Municipal Lien Search?
Property tax liens are placed on a property when the owner falls behind on their taxes. This is one of the many types of encumbrances settlement agents look for during the title examination period. However, depending on the time of year, recently unpaid taxes may not show up in the public record due to the backlog of paperwork at the county recorder’s office.
Additionally, some municipalities may include special assessments or utility bills on the property tax bill, but other municipalities may disclose outstanding special assessments and utility charges through a separate department.
The tax bill also helps to further establish which municipality or municipalities have governing jurisdiction over a property. This is helpful in some jurisdictions with unclear information from the property appraiser.
The tax information found in our Municipal Lien Search Report shouldn’t be confused with our Tax Certificate Report, which details taxing authority information.
The real estate contract will usually identify which type of property information is customary for your area. To help you determine which is right for you, you can read more about when a homebuyer needs a tax certificate here or contact the title agent or real estate attorney handling your closing.
For states that issue a tax lien certificate on properties, the owner could lose the property in a tax deed sale. A third party who purchases a tax lien certificate could ultimately become the legal owner of the property in question.
What states allow tax lien or tax deed sales?
Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Vermont, West Virginia, Wyoming, and the District of Columbia are all considered tax lien states.
Towns or counties in these states will auction off the tax lien certificates to investors, who then pays the taxes on behalf of the property owner. The certificate allows the investor to collect unpaid taxes plus a rate of interest that can range from 8-30% depending on the jurisdiction.
Acquiring a property through a tax deed sale is rare since most homeowners eventually pay the back taxes. The term of the tax lien certificates typically ranges from one to three years, so it’s imperative that a homebuyer is aware of any tax lien certificates placed or pending on a property.