Can You Sell a House If You Owe Property Taxes?

Before you list your home, it's important to know that unpaid property taxes can delay or even block the sale. These debts often result in a lien—a legal claim against the property—that must be resolved before ownership can legally transfer.

Still, it’s possible to sell a home even if you’re behind on property taxes. If you’re selling a home with a lien, we’ll explain how tax debt affects the sale—and outline your options for resolving it and closing the deal.

What Is a Property Tax Lien?

When property taxes go unpaid, the local government can file a property tax lien—a legal claim that attaches to your home. This lien ensures the debt is paid before the property can be sold or refinanced. If the balance isn’t resolved, the tax authority may eventually escalate the matter, including initiating foreclosure.

In a strained economy, it’s easy to fall behind on property taxes. Interest and penalties can accumulate quickly, turning a manageable balance into a growing financial burden. If you're thinking about selling to protect your equity and resolve the debt, acting sooner rather than later can help you preserve your home's value.

How a Lien Affects Selling Your Home

A property tax lien won’t stop you from listing your home or accepting an offer, but it will show up during the title search. The title company will not issue title insurance until the lien is resolved, which effectively prevents the sale from closing.

To remove this obstacle—often called a “cloud on title”—the unpaid taxes must either be paid off or deducted from the sale proceeds at closing. If not resolved, the sale may be delayed, fall through, or even lead to a forced tax sale by the government.

The Process of Selling a House with Unpaid Property Taxes

Option 1: Pay the Taxes Before Closing

If you're selling property with delinquent taxes, paying off the balance before closing is often the most straightforward approach. Start by contacting your local county tax authority to request a full payoff amount, including interest, penalties, and fees. If you don’t have the full amount available, you might set up an installment plan directly with the tax authority or take out a short-term loan to pay off the lien, then use sale proceeds to repay the loan.

Once the lien is paid off, request a lien release. This clears the title, allowing the sale to proceed smoothly—and may help you attract more buyers or receive better offers.

Option 2: Pay the Taxes at Closing

In many cases, sellers handle the tax lien at closing. The closing or escrow agent will use the sale proceeds to pay off the tax debt directly to the tax authority. Once the lien is satisfied, the title is cleared, the buyer can take ownership, and you receive any remaining funds.

This is the most practical approach, especially for houses with back taxes, and is commonly handled by experienced real estate agents or cash buyers.

Option 3: Buyer Assumes the Tax Lien

In special situations—such as foreclosure auctions or distressed sales—a buyer may agree to take over the tax debt. This typically requires a price reduction and clear documentation outlining who is responsible for paying the taxes moving forward.

Because mortgage lenders generally will not approve financing unless the lien is resolved, this option is usually limited to cash buyers. It’s also most commonly considered when the seller has little or no equity and cannot pay the debt out of pocket.

Key Considerations When Selling With a Tax Lien

Once you’ve decided to move forward with the sale, there are a few critical steps and decisions that can help you protect your interests, avoid delays, and move the transaction forward.

Communicate With Your Local Tax Authority

Your first step should be contacting your county or municipal tax office. In many cases, they’re willing to work with homeowners to release a lien once the sale is in motion. They may allow a partial payment at closing, using proceeds from the sale to settle the debt. If you're experiencing financial hardship, ask whether payment plans or other forms of relief are available.

Consult a Real Estate Attorney

If the lien is large, disputed, or tied to other legal complications, a real estate attorney can help protect your interests. They can negotiate with the tax authority, review your sale contract, and make sure lien-related terms are properly documented. Attorneys can also help you evaluate whether a buyer might legally assume the lien—and draft the necessary paperwork if that path makes sense.

Be Transparent With Buyers

Buyers will discover the lien during the title search, so it’s best to disclose it early. Transparency builds trust, avoids surprises, and gives everyone time to coordinate payment or lien release before closing. Experienced buyers—especially cash home buyers—may be more willing to work with you if you’re clear about the situation from the start.

Still Struggling to Sell? 800CashToday Can Help

We understand how overwhelming it can feel to face a lien or looming foreclosure—especially if you're short on time or options. That’s why working with a cash home buyer like 800CashToday is often the easiest and fastest solution.

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Disclaimer: This article provides general guidance, not legal advice. Please consult a licensed real estate or legal professional for your specific situation.