A Tax Lien or Unpaid Property Taxes? We Buy As-Is, Liens and All

Yes. Owing back property taxes, even a tax-defaulted balance, does not stop a sale. The unpaid taxes, penalties, and fees are generally paid out of your proceeds through escrow, since a property tax lien has priority over other liens on the property regardless of when those other liens were recorded. If there isn't enough equity to cover it, the shortfall still has to be addressed before title can transfer clean.

The unpaid balance becomes tax-defaulted at 12:01 a.m. on July 1, automatically, under Revenue and Taxation Code section 3436. That starts a redemption-penalty clock, not an immediate sale of the property. The tax collector does not get the legal power to sell a tax-defaulted residential property until it has been in default for five years or more, under section 3691.

Under Revenue and Taxation Code section 4103, a redemption penalty of 1 1/2 percent a month is added to the defaulted amount, on top of a flat redemption fee under section 4102. In Los Angeles County that fee is currently $15 per the county's own published guidance. There's no cap on how long the penalty runs, so the total generally keeps growing every month the balance stays unpaid.

Generally five years from the date the property first became tax-defaulted, under Revenue and Taxation Code section 3691. Reaching that mark gives the tax collector legal authority to schedule an auction; it does not mean one happens automatically the next day.

Often, yes. Under Revenue and Taxation Code section 4217, you can generally elect an installment plan of redemption any time before the tax collector's power to sell arises. Los Angeles County runs this as its Five-Pay Plan for eligible residential, agricultural, commercial, and vacant residential property, based on how long the taxes have been in default. Staying current on the plan and on new taxes going forward matters, since falling behind can put a property back where it started.

No. A county property tax lien attaches only because of unpaid property taxes on that specific parcel. An IRS Notice of Federal Tax Lien and a state tax lien recorded under Government Code section 7170 both attach because of a separate income or business tax debt, and each can reach real property, personal property, and future assets regardless of whether the property taxes themselves are current. Clearing either one generally means contacting that agency directly for a payoff or release, not the county.

Generally nothing on our end. We do not charge a fee, a deposit, or an inspection charge to buy a house with a tax-defaulted balance or a recorded tax lien attached. In most cases there is also no cost to you if the sale does not end up closing. Every file and every county tax record is different though, so treat that as the starting point, never a blanket guarantee.

This overview of California property-tax lien law is general information, not legal advice, and it is not a substitute for guidance from a licensed California attorney about your specific situation.

California collects most secured property tax bills in two installments each year, and the second installment is due February 1 and becomes delinquent after 5 p.m. on April 10. If the full year's bill is still unpaid by June 30, the unpaid amount becomes tax-defaulted at 12:01 a.m. on July 1, automatically and by operation of law, under Revenue and Taxation Code section 3436. That default declaration is a different, earlier event than the county actually being able to sell the property, and the two get confused often. A single missed installment does not put a house on an auction list by itself. It starts a longer clock, and what happens on that clock is what actually determines how serious the situation is.

Once a property becomes tax-defaulted, the balance does not just sit there. Revenue and Taxation Code section 4103 adds a redemption penalty of 1 1/2 percent a month on the defaulted amount, starting July 1 of the default year, and the same penalty is added again each following July 1 on whatever is still unpaid. Under section 4102, redeeming the property also means paying a flat redemption fee on top of the taxes and penalties. The Los Angeles County Treasurer and Tax Collector's own guidance for secured property taxes puts the mechanic in plain terms: a $15 redemption fee gets added, and defaulted property taxes are subject to an additional penalty of 1.5% of the base tax per month. None of that is capped at a fixed dollar figure, so the amount owed generally keeps growing every month the balance goes unpaid.

There is a real deadline behind all of this, and it is measured in years, not months. Under Revenue and Taxation Code section 3691, once property has been tax-defaulted for five years or more, the tax collector gets the power to sell it at public auction to recover the unpaid taxes, penalties, and costs. Reaching the five-year mark does not mean an auction happens automatically the next day, but it does mean the county now has the legal authority to schedule one. Treating the clock as something that resets or quietly goes away on its own is the mistake that tends to cost people real equity.

California law also gives you a way to stop the clock without paying everything at once. Under Revenue and Taxation Code section 4217, a person can generally elect to pay delinquent taxes in installments any time before the tax collector's power to sell actually arises. Los Angeles County runs this as its Five-Pay Plan, available to residential and agricultural property in default less than five years, and to commercial or vacant residential property in default less than three years, per the county's own published guidance. Enrolling means staying current on the plan itself and on current-year taxes going forward; falling behind on a plan payment can put a property back where it started. It is a real option, not a guaranteed fix, and it does not erase the lien so much as spread the payoff out.

A property tax lien is not treated like an ordinary debt when a house closes. Under Revenue and Taxation Code section 2187, every tax, penalty, and interest on real property is itself a lien against that property, and under section 2192.1, that lien has priority over other liens on the property regardless of when those other liens were recorded. In practice, that generally means escrow pays off delinquent property taxes, penalties, and the redemption fee first, ahead of a mortgage, a judgment, or an HOA assessment.

A county property tax lien is not the same as a federal or state income-tax lien, even though people use "tax lien" for both. The IRS files a Notice of Federal Tax Lien when a federal tax debt goes unpaid, and that lien can attach to real and personal property. Paying the debt in full is generally the most direct way to clear it; the IRS states it releases the lien within 30 days of full payment. California's own state tax lien works differently: under Government Code section 7170, a state tax liability becomes a lien on all real and personal property a taxpayer owns in California. Getting a payoff figure and a release generally means contacting that agency directly, since neither lien clears through the county's property-tax system. If your title carries a different kind of lien entirely, the process to sell a house with unpaid HOA assessments, or to sell a house before the notice of default sale date, works the same way: we work it out through escrow rather than asking you to clear it first.

None of this needs to be untangled before you can sell. Selling as-is means the buyer takes the property in its current condition, tax situation included, and it does not erase any lien from title on its own. Whatever is owed, current-year taxes, a prior-year default, penalties, or a separate IRS or state lien, still has to be accounted for through escrow before the sale can close. Selling to a cash buyer generally sidesteps the retail-lender requirement to clear that balance before funding, since there is no financing contingency in the way. That holds whether the property sits in an unincorporated pocket of the county or anywhere else in it — it works the same way everywhere. There is no fixed timeline; it depends on how long the taxes have been unpaid and whether other liens are layered on top. We do not charge sellers a fee, deposit, or inspection charge to buy a house with back taxes or a tax lien attached.

These FAQs about California property-tax lien law are general information, not legal advice; consult a licensed California attorney about your specific circumstances.