Tax Liens

Two of the most common ways to lose your home are foreclosures and tax liens.  Of these two options foreclosure is the most well known; essentially people stop making payments on their mortgage and the bank kicks them out of the house.  Many people have never even heard of tax liens.  "What are tax liens" they often wonder.  Tax liens are similar to any other lien in that they are imposed by different entities that the homeowners owe money to and that have a rightful claim upon the house in order to recoup that lost money.  Tax liens are specifically imposed on homeowners who are delinquent in their property and/or federal taxes.

Mortgage companies are often affected by these tax liens.  If a lien is placed on a home that they have a loan out on there is a high risk.  If the government was to place an absolute deed on the property then the title could be sold and the homeowners kicked out, leaving a mortgage and no property attached to it.  If the homeowners were to stop paying on their mortgage then the bank would have no way to recover all of their losses, because tax liens supersede mortgage holder's liens.  For this reason, when mortgage companies receive word that a tax lien has been placed on the property they often pay the tax and then create an escrow account and attach a fee to the mortgage payment in order to remake that money.

Many people already have escrow accounts through their mortgage companies.  This is a great way to avoid tax liens being placed on their homes.  If they were to travel the unfortunate road that is liens the most important thing to do would be to set up payments with the IRS or, when circumstances allow, pay the amount in full.  Sometimes people lose their homes over a couple thousand dollars.  This is definitely not worth it.

In order to have tax liens placed on a person's property that individual must be delinquent in either their property or federal income taxes.  These liens are generally not immediately acted upon in the form of seizing and selling the property.  Plenty of notices are given to homeowners so that they can have the chance to keep their property.  In the event that the owners to not pay the taxes within the redemption period the tax lien certificate becomes an absolute deed and the title is transferred with ease to the new owners, because no encumbrances are attached to the title.

Keeping property investments is as easy as 1-2-3.  Sometimes in the heat of a desperate situation it might not seem so simple, however setting up an escrow account through the homeowner's mortgage company or local bank can prove to be very helpful.  Also, finding help through friends, books, or companies can give homeowners an advantage in avoiding liens placed on their property due to delinquent federal income taxes.  Sometimes income taxes and escrows can be very daunting, but with the right help and information homeowners can avoid the pitfalls of tax liens and remain owners and dwellers of their beloved property.