Can I Sell My Home With Unpaid Property Taxes or Tax Liens?

Any deed holder who’s struggling with the cost of living would understand: meeting property tax deadlines can be stressful. Sometimes, tax deadlines bring impossible burdens to a household. Those who need to sell their homes may wonder what can be done about the back taxes.

The city or county government may have recorded a property tax lien against the home. And property taxes aren’t the only lienable ones. Income taxes also come into play here. After three years of past-due income taxes, the state or federal government can record a lien against a deed holder’s title.

An owner can’t profit from a home sale or reach home equity unless and until tax liens are resolved. This ensures that the government can get the money it’s owed from the deed holder. Neglect a tax lien long enough, and a government can foreclose on the lien.

So, do sales of homes with unresolved tax liens exist? Here, we explore the question.

Selling: A Go-To Solution, or a Last Resort?

When a home sells under normal conditions, the current tax bill is resolved on a pro-rated basis at closing. The buyer receives the deed with no taxes due. But what if a homeowner needs to sell because taxes are overdue? It happens. Although the deed holder might not want to do it, selling could be the best way forward in the path to a new home that’s financially easier to deal with.  

Homeowners with enough equity (home value minus the mortgage balance and tax debt) might decide to sell their homes, then pay off the old taxes from the proceeds. They list the home—lien and all—on the market, aiming to pay back all debts. Then the lien could be released, and the sale finalized.

Tax authorities sometimes agree to work with taxpayers to compromise or set up monthly installments to pay off back taxes. So, the deed holder should call the government to which taxes are due, and learn what options may exist. Here are two mechanisms to know before you call:

• Discharge: A deed holder may request a certificate of discharge to remove the lien. The tax debt remains, but at least the title is freed up to sell. Then the debt can be paid from the proceeds.

• Subordinating the tax lien: This allows the mortgage lien to be resolved while the tax lien exists, allowing the home to be sold. IRS Publication 784 provides instructions.

Waiting for a tax lien to expire is not recommended. It takes a long time. For example, the Internal Revenue Service has 10 years to collect on its tax liens plus possible extensions.

Meanwhile, a home with outstanding property taxes does not appeal to most buyers. They know it will take time for the lien(s) to be addressed. The buyer may rightly be concerned that the government might move to foreclose on the lien after the sale. Of course, this would scare away potential buyers.

Pay If You Can (But What If You Can’t)?

If possible, pay the tax lien off and have the lien released. It’s not always possible, depending on a household’s circumstances. For some, the trouble with tax liens can appear insurmountable. They may have tried for years to get caught up, while interest just keeps accruing.

Some sellers go to real estate investors or closing attorney firms that focus on making cash offers for homes that need tax liens removed. If the deed holder cannot pay back the taxes before selling the real estate, or through the sale itself, this is one answer. When the sale proceeds fall short of the combined debt (tax and mortgage lien), the deed holder has to bring funds to the closing, to cover the remaining balance.

When the sale proceeds cover all debt with money left over, the deed holder can recover the surplus. But there will be fees to pay for the professionals involved in the closing.

If you decide to sell to a professional buyer, apply due diligence when choosing the company. Avoid cash buyer scams.

Can a Tax Lien Stop a Deed Transfer From Being Recorded?

It can. Whether it will or not depends on the law and policy of your state and county.

Take Warren County, North Carolina, for example. The Warren County commissioners have just passed a new resolution. It says a seller’s tax bills must be paid off before the county will record the deed transfer.

Previously, Warren County deed holders have been able to transfer their deeds without having to go to the county tax office and resolve any past-due taxes. That left new owners holding the bag.

Now, Warren County has invoked the North Carolina state law that allows a list of North Carolina counties to pass resolutions that mandate tax certification before a deed can be recorded. Since Warren County passed its resolution, a seller will now have to go to the tax office, pay any past-due taxes, and get the deed stamped accordingly. Only then can the deed be recorded.

The deed recorder will make an exception for a deed filed by the closing attorney, who must be admitted to the North Carolina bar. The attorney would need to state on the deed:

This instrument prepared by: __________, a licensed North Carolina attorney. Delinquent taxes, if any, to be paid by the closing attorney to the county tax collector upon disbursement of closing proceeds.

Can someone get my deed by paying off my property tax lien? Learn more with Deeds.com.

Keep Calm and Carry On

You’re not alone out there if you’re a struggling homeowner. Property taxes across the country rose 27% between 2019 and 2025. Your income probably didn’t rise 27%. For many deed holders, the strain on household budgets is starting to show. 

At least tax liens don’t count against the deed holder’s credit profile or change a FICO® score. And there are mortgage specialists who focus on people with financial challenges. For many struggling households, it’s possible to get a mortgage and move into a more affordable home.

Please keep in mind that Deeds.com does not supply legal or financial advice. We cannot recommend any one course of action. We set this out for your general information only. For personalized advice, consult a well-regarded real estate attorney who has experience with property liens.