It’s very important that you connect with a title service like Commercial Partners who can uncover issues like a tax lien on a property. While it may seem like a tax lien is the current owner’s problem, if you do not take steps to address the issue during the due diligence stage of acquisition, the unpaid tax lien will become your problem after the completion of the sale.
So how can you navigate a tax lien on a commercial property you are interested in buying? For starters, you need to learn of its existence, so doing your research on a property or outsourcing this process to a title clearing company is essential. Once the lien is uncovered, you’ll work with the property owner to determine how the lien will be accounted for. In many instances, it is written into the contract that a portion of the proceeds of a sale will be taken from the seller and used to pay off the outstanding tax lien.
In rarer cases, the seller may take a reduced sale price under the agreement that the new owner will assume a tax lien. Since the state wants to ensure they are paid what they are owed during the course of a property sale with an outstanding lien, they may enforce a lien and require that a portion of the sale be used to settle a debt instead of allowing the tax burden to be passed onto a new owner. However, if the new owner has the means to settle a tax lien during the course of acquisition, the state may drop the tax lien prior to the completion of the sale.
As a buyer, the only situation you really want to avoid when purchasing a property with a tax lien is unknowingly acquiring a property with an outstanding tax lien. If you believe you are getting a great deal on a property so you rush through the investigation stage, you may end up on the hook for these unpaid taxes. Always research a title with a title service provider prior to a purchase, and ensure that you know exactly how a tax lien will be settled during the due diligence stage of acquisition so that you can clear this cloud from your new property’s title.
Don’t get stuck footing someone else’s unpaid tax bill. Connect with the team at Commercial Partners and ensure your financial interests are protected during your next commercial purchase. For more information, contact our team today at (612) 337-2470.