What Is a Tax Lien?
If you are a home owner, then you may have a one-sided understanding of this term. The tax portion of the term typically refers to unpaid property taxes. The dictionary definition of lien is:
“The legal claim of one person upon the property of another person to secure the payment of a debt or the satisfaction of an obligation.”
By putting these two concepts together, we can now see that a tax lien uses an individual’s property as collateral to ensure the settlement of a tax-related debt owed to another person or entity. While initially that debt is owed to the government that imposes the taxes, after a set amount of time these government agencies will auction unpaid debts to recoup their own expenses more quickly, opening an opportunity for savvy investors.
Posts
|