Selling a house can already be a complicated process—but when unpaid property taxes are in the mix, things get even trickier. Back taxes can create legal hurdles, scare off potential buyers, and delay or even derail a sale entirely. For many homeowners, the pressure of dealing with both a looming tax bill and the need to sell fast can feel overwhelming.
In this roundup blog, we’ll break down the challenges of selling a house with unpaid property taxes, what those back taxes mean for your sale, and the practical steps you can take to move forward—whether that’s paying off the debt, negotiating with buyers, or working with a cash home buyer who can close quickly.
- What Happens When You Owe Property Taxes?
- Can You Sell a House with Unpaid Property Taxes?
- Who Pays Delinquent Property Taxes at Closing?
- How to Sell a House with Unpaid Taxes
- The Benefits of a Cash Sale for Homes with Unpaid Property Taxes
What Happens When You Owe Property Taxes?
When property taxes go unpaid, your local government may place a lien on your home. A property tax lien gives the municipality a legal claim to your property as collateral for the unpaid debt. Over time, penalties and interest can accrue, increasing the total amount owed. In some cases, the government may even initiate a tax sale or foreclosure to recover the debt. Until the lien is cleared, it can complicate the sale process by clouding the property title and make it harder to transfer ownership to a new buyer.
Can You Sell a House with Unpaid Property Taxes?
Yes, it is possible to sell a house with unpaid property taxes, but there are challenges involved. The outstanding tax debt must typically be resolved before the sale can be finalized. Most buyers—and their lenders—will require a clear title, free from liens, before moving forward. That means either the seller pays off the taxes prior to closing, or the amount is deducted from the seller’s proceeds during the sale. Some buyers, particularly real estate investors or cash home buyers, may be willing to purchase the property as-is and handle the tax debt themselves.
Who Pays Delinquent Property Taxes at Closing?
In most traditional real estate transactions, the seller is responsible for paying off any delinquent property taxes at or before closing. These taxes are usually settled using the seller’s proceeds from the sale, ensuring that the buyer receives a clean title. If the tax debt is significant and exceeds the expected profit from the sale, sellers may need to negotiate with the buyer, work with the taxing authority on a payment plan, or consider alternative selling options such as working with a cash home buyer. Either way, unpaid property taxes must be addressed in some form before the transaction can be completed.
How to Sell a House with Unpaid Taxes
Selling a home with unpaid property taxes is doable, but it requires extra steps to make sure the sale goes smoothly. Here's a step-by-step guide to help you navigate the process.
Step 1: Confirm the Amount Owed
Start by contacting your local tax assessor or treasurer’s office to get an up-to-date statement of how much you owe, including penalties and interest. This gives you a clear picture of what needs to be paid to clear the title.
Step 2: Decide How You’ll Handle the Debt
You have a few options: pay off the taxes before listing, roll them into the closing costs, or sell the house as-is to a buyer willing to take on the debt. The best choice depends on your financial situation and how quickly you need to sell.
Step 3: Consider Selling to a Cash Home Buyer
If you want to avoid the hassle of paying off the debt yourself, a cash home buyer or investor may be your best option. These buyers purchase homes as-is and are used to handling issues like tax liens.
Step 4: Be Prepared for Negotiation
In a traditional sale, the buyer’s lender will likely require all liens to be cleared before approving financing. That means you’ll need to be ready to settle the taxes during the closing process or negotiate with the buyer on how they’ll be handled.
Step 5: Work with a Title Company or Attorney
A title company or real estate attorney can help ensure all liens, including unpaid taxes, are addressed and properly cleared before closing. They’ll also handle the disbursement of funds to the taxing authority if taxes are paid from the sale proceeds.
Step 6: Close the Sale
Once the tax debt is resolved and all paperwork is in order, you can move forward with closing. After the sale, the property title transfers to the buyer, and any remaining proceeds (after taxes and fees) go to you.
The Benefits of a Cash Sale for Homes with Unpaid Property Taxes
Wondering how a cash sale can help with unpaid property taxes? Here’s what our home buying experts have to say.
1. Quick Sale
“If there is a state lien due to unpaid property taxes or any legal lien imposed on your property due to unpaid bills, you cannot legally sell, refinance, or transfer ownership until you satisfy your debtors and release the lien on your property. Sell to a real estate investor! Investors often specialize in properties with title issues and are more likely to offer cash for a quick sale, potentially accepting a lower price to cover the tax lien.”
2. Greater Flexibility
“Consider working with a cash buyer or investor, as they are often more flexible with properties that have title issues. Unpaid taxes create a lien on the property, which must be addressed before or during closing. While this can complicate a traditional sale, many cash buyers are experienced with these situations and can close quickly—often in just a couple of weeks. They may be willing to purchase the home as-is and allow the tax lien to be paid directly from the sale proceeds at closing. This can help you avoid paying the taxes upfront and reduce the risk of penalties or a tax sale.”
3. Immediate Resolution of Tax Debt
“Selling to a cash buyer offers significant advantages, including a faster closing process without bank financing delays, as-is purchases that eliminate the need for costly repairs, simplified transactions with fewer contingencies, and immediate resolution of mounting tax debt before additional penalties accrue. Something very important to note is that time is of the essence. After property taxes become delinquent, most counties will sell the tax debt at auction. Following a tax sale, homeowners typically have a redemption period of 1-2 years before potentially losing their home completely. Don’t wait until it’s too late.”
4. Structured Exit Plan
“The earlier you take action, the more control you have. Falling behind on property taxes can lead to serious consequences—tax liens, interest penalties, and eventually a tax deed sale where the property is auctioned. But if you're a homeowner in this situation, there are ways to move forward without losing everything. Traditional sales can be slow. If you're thinking about listing with a realtor, remember that most buyers rely on bank financing. That means inspections, appraisals, and waiting 30–60 days (or more). During that time, your tax situation could get worse. Understanding your rights, your timeline, and the tools available—like cash offers—can turn a stressful tax issue into a structured exit plan. The key is to take action before the county does.”
5. Simplicity & Minimal Stress
“Selling a house with unpaid property taxes is entirely possible. Whether the debt is paid from the sale proceeds, negotiated into the deal, or handled by the buyer, there are multiple paths forward. The key is knowing your options, planning ahead, and choosing the approach that best fits your situation. For those looking for speed, simplicity, and minimal stress, working with a local real estate investor can be one of the smartest moves.”
6. Faster Than a Conventional Sale
“With there being no banks or outside lenders involved, a cash closing typically occurs much faster than a conventional sale. Property taxes get resolved during the closing process, so the taxes don't follow the seller to their next home!”
7. No Money Out of Your Pocket
“Contact us and we can negotiate a way to include that in the sales price so that you do not have to come out of pocket for anything.”
8. Expert Help
“Owing taxes on a property shouldn't derail the process of selling your house. However, navigating the sale process when taxes are owed can be tricky, depending on your exact circumstances. One of the best ways to sell a home with tax issues is to work with a local real estate investor. We have the time and resources to help you navigate your options and achieve the best possible outcome for your circumstances.”
9. Avoid Legal Trouble & Foreclosure
“Many sellers worry they can’t sell a home with tax debt, but that’s a misconception. The balance is typically paid from the final sale amount. Cash buyers make the process smoother, helping avoid legal trouble or foreclosure by acting quickly.”
10. Prevent Tax Lein Sale
“If you owe back taxes (even a lot), it's not the end of the world! In the case of back taxes that are not too old and not causing a tax lien sale situation, in most cases we can buy the house and the taxes that are due can be deducted from the proceeds at the time of closing. If the taxes are very old, very overdue, and the house is going to a tax lien sale, it can be a little more
complicated and, of course, a lot more time sensitive! We can help you navigate through the situation. In a lot of these cases, there is a sale date scheduled, and the taxes have to be paid before the house goes to sale for the outstanding amount of taxes owed. If you are currently dealing with an issue like this, we would love to help! Even if you just need some free advice!”
11. Clear the Taxes Owed Sooner
“Selling your house with tax issues can be a difficult thing. It’s definitely a situation where the tax situation will have to be taken care of before the transaction can be completed. Selling to a cash buyer will help your transaction move quicker, which means your tax situation can be cleared sooner. Depending on the exact situation and amount, you can be up against losing your home.”
12. Quickest Way to Get out of a Tax Crisis
“Selling your house for cash is the quickest way to get out of a tax crisis. We can pay the taxes that are owed as part of the sale, making this headache go away in the quickest way possible.”
13. Negotiate a Better Price & Make More Money
“Homeowners can look up online the amount of outstanding taxes owed and can make the payment online if they have the funds available. If not, the house could be sold at a tax auction, and they may make very little or nothing from the sale. The homeowner has the option to sell the house to a cash buyer and can negotiate a better price and receive more money than they would at the tax auction. The cash buyer will pay off the tax lien at closing.”
14. Be in Control of the Transaction
"Selling your property with a cash offer can simplify the process because we are trained and deal with these issues regularly. When selling traditionally with tax issues, the transaction has a lot of unexpected challenges that come up and delay your closing, which in result reopens negotiations, causing stress and feeling blindsided with obstacles to handle mid-transaction. Selling with a cash offer, everything is discussed upfront so you can be assured that you are in control of your transaction."
Selling a House with Unpaid Taxes? Contact New Again Houses Today!
If you’re facing the stress of unpaid property taxes and need to sell your home, New Again Houses can help. We specialize in buying homes as-is—including those with unpaid taxes and tax liens. We’ll work directly with you to make the process simple, fast, and stress-free.
When you sell to New Again Houses, we’ll handle the details—so you can move on with peace of mind. Contact New Again Houses today to take the first step toward a fresh start.
