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You’ve found the perfect home—it’s in a good location close to your work and has the quality of life you’ve dreamed of. Unfortunately, it has a tax lien on it and you’re worried that you may not be able to buy it. Not to mention, the concern you have about the unpaid taxes the previous owner left on it.

What is a Tax Lien?

A tax lien means that the owner of the home didn’t pay a tax on it, so the government has a right to it until the debt is paid off. The good news is, you can buy a home with a tax lien on it, but it depends on if you’re paying with cash or you need a loan to purchase the home. Either way, it comes with significant risk, so proceed with caution.

You Can Buy a Home with a Tax Lien If You’re Paying Cash

If you are paying for the home with cash then there is nothing stopping you from buying a home with a tax lien on it. You have buying power and you don’t have to worry about getting a loan.

Just remember, when you buy the home:

  • You take the place of the previous owner
  • The unpaid taxes are still attached to the property
  • You won’t be able to get a title insurance

If the unpaid taxes don’t get paid, it doesn’t matter if the home is yours or not. The government entity that has interest in the home can still foreclose on it to get the money that it’s owed, forcing you to move out.

You Cannot Buy a Home with a Tax Lien if You Need a Loan

However, if you need a Kansas City home loan to purchase the home, chances are you won’t be able to buy it. When it comes to payment, a loan needs to come first and when there’s a tax lien on the home, the loan becomes secondary to it. Thus, lenders don’t want to run the risk of the loan being neglected. Someone will have to pay the unpaid taxes before you will be able to get a loan on the property.

Up Next: Understanding Warranty of Title

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