There are a number of different issues that may be uncovered when you enlist a title clearing service like Commercial Partners to research a property’s title prior to moving forward with a sale. One potential issue that can be uncovered that will need to be assessed and resolved either before or shortly after the completion of a sale is the existence of a tax lien. In today’s blog, we explain why a tax lien may exist on a commercial property you are considering buying, and how to go about resolving this cloud on the title.
Why Do Some Commercial Properties Have Tax Liens?
A tax lien may be uncovered on a title because the property’s owner failed to pay their required property tax. If you fail to pay your property taxes on time, the state or the county may place a tax lien on your property. A tax lien essentially allows them to take ownership of the property if you cannot settle this tax debt that you owe.
The good news is that the state can’t take your property overnight. Once you are deemed to have failed to pay your property taxes by the required deadline, you will have a set period of time to settle your debt before the state can enforce a tax lien and assume your property. It’s also worth noting that penalties fees, delinquency fees and interest will be assessed to any unpaid property tax, so know that if you fail to pay your property tax on time, you’re going to have to pay more than the original amount in order to settle your debt.
Simply put, unpaid property taxes can end up snowballing, and while this is a problem for the current property owner, it can lead to some opportunities for commercial real estate investors. The seller may be looking to move the property quickly in order to escape a tax lien, and this can allow you to get a great property at a reduced price.