When you think about selling your home or land, unpaid property taxes may not be the first thing on your mind. In Kentucky, these taxes attach to your property as a lien, and that lien can affect your ability to sell. While you may still find a buyer, most sales will not close until the taxes are cleared.
What happens when property taxes are unpaid?
When property taxes go unpaid in Kentucky, they become delinquent and are transferred to the county clerk as a certificate of delinquency. Under Kentucky law, a lien attaches to the property for the amount owed, including interest and penalties. This lien stays with the property even if ownership changes. Because of this, buyers and lenders expect the taxes to be paid off before agreeing to close the deal.
Can you sell with a tax lien on the property?
Legally, you can still sell a property that has a tax lien, but most buyers will not accept title until the lien is resolved. During closing, unpaid taxes are often paid directly out of the seller’s proceeds, ensuring the buyer receives a clear title. If the sale price does not cover what you owe, you may need to bring additional funds to closing to settle the debt.
Why is resolving taxes before closing important?
A title search will reveal any outstanding tax liens on the property. Buyers want to avoid inheriting these debts, so failing to address them can cause a deal to fall apart. Clearing the lien early avoids delays, makes your property more marketable, and gives buyers peace of mind about the purchase.
Steps to take when selling with unpaid taxes
If you have unpaid property taxes and want to sell, contact your county clerk or tax office to confirm the total amount owed. Discuss with your real estate agent how the taxes will be handled at closing. Taking care of these obligations ahead of time helps ensure a smoother and more successful sale.
Unpaid property taxes do not make it impossible to sell your home in Kentucky, but they must be addressed before the sale can close. By resolving them in advance, you make the real estate transaction process easier for everyone involved and avoid unnecessary roadblocks.