Delinquent property taxes and liens don't prevent you from selling land. They don't disappear on their own either — but they can be paid off at closing from your sale proceeds, letting you transfer clean title to the buyer without bringing any money to the table yourself.
This is how the process works, what liens attach to land, and what sellers in this situation should know before they list or accept an offer.
This is general information. For specific advice on your liens or title situation, consult a real estate attorney or contact a title company in your state.
The Key Point: Liens Are Paid at Closing, Not Before
Most sellers with back taxes or liens fear they need to come up with the money before they can sell. That's not typically the case. When you sell land:
- The buyer brings the purchase price
- The title company collects those funds
- Before disbursing anything to you, the title company pays all outstanding liens from the proceeds
- You receive the balance — the purchase price minus the lien payoffs and closing costs
If the land is worth more than what's owed, you walk away with net proceeds. If the liens exceed the land value, you'd be selling at a loss — and you may need to negotiate with lienholders or consider other options.
Types of Liens That Can Attach to Land
Delinquent Property Taxes
This is the most common lien on vacant land. When property taxes go unpaid, the county records a lien against the parcel. In most states, the county can eventually sell a tax lien certificate to investors and, after a redemption period, move toward tax deed foreclosure.
Delinquent taxes are paid from proceeds at closing. The title company contacts the county treasurer, gets the exact payoff amount (original taxes + interest + penalties), and pays it directly before any money reaches you.
Why this is manageable: Vacant land values often significantly exceed the back taxes owed, especially if taxes are relatively modest per year. A parcel worth $30,000 with $3,000 in delinquent taxes still nets the seller $27,000 minus closing costs.
When it becomes a problem: If taxes have been delinquent for many years, interest and penalties compound. In some states, investors who purchase tax lien certificates at county auctions can eventually foreclose — at which point you may have a narrow window to sell before losing the parcel entirely.
Mortgage or Deed of Trust
If you ever financed the land purchase and still have a balance, the lender holds a mortgage or deed of trust recorded against the property. At closing, the title company gets a payoff statement from the lender and pays off the balance before you receive your net.
Most cash land deals involve sellers who own the land free and clear — mortgages on raw land are relatively rare — but it happens.
Judgment Liens
If a creditor obtained a court judgment against you and recorded it in the county where the land is located, that judgment can attach as a lien on your real property. Common sources: unpaid medical bills, contractor disputes, business debts.
Judgment liens must be paid or negotiated before title can transfer. The title company's title search catches them. If you don't know you have one, you'll find out during the title review period.
Negotiating judgment liens: Creditors sometimes accept less than the full judgment amount to release the lien, especially if the alternative is waiting years for collection. A real estate attorney can help negotiate a lien release in exchange for a settlement payment from closing proceeds.
Mechanic's or Contractor's Liens
If contractors performed work on the land (well drilling, grading, road work) and weren't paid, they can file a mechanic's lien against the property. These must be released before title transfers.
Mechanic's liens have strict filing deadlines that vary by state — many expire if not followed up with a lawsuit within a specific window. A title search will catch active liens.
IRS Federal Tax Liens
If the IRS has recorded a Notice of Federal Tax Lien against you for unpaid federal taxes, that lien can attach to all of your real property. It must be paid or released before title transfers to a buyer.
IRS lien discharge: Even if you can't pay the full lien, the IRS has a process (Form 14135) to "discharge" specific property from a tax lien, allowing a sale to proceed. The IRS doesn't have to agree, but they often do if the proceeds are being applied toward your tax debt. An experienced tax attorney or CPA can navigate this.
HOA Liens
If the land is within a homeowners association and dues are delinquent, the HOA may have recorded a lien. These are typically smaller amounts and paid at closing the same way other liens are.
The Title Search Process
When you open a title order with a title company, the first thing they do is a title search — a review of the public record to identify any liens, judgments, easements, or encumbrances attached to the parcel. This search covers: - County recorder records (deeds, liens, easements) - County treasurer records (tax status) - State and federal judgment databases - Federal tax lien index
The results appear in the title commitment as "requirements" — things that must be resolved before they'll issue insurance and close. Each lien or encumbrance listed is something the title company will handle at closing from proceeds, or that you need to address separately.
When Liens Exceed Land Value
If the total liens against the property are greater than what a buyer will pay, you have a net negative position. Options in this situation:
Short sale negotiation: Similar to residential short sales, you can sometimes negotiate with lienholders to accept less than the full amount owed in exchange for release of the lien. This requires their agreement. The IRS and major lenders sometimes participate.
Walk away: Liens are attached to the land, not to you personally (in most cases). Stopping payments and letting the county foreclose or the lienholder take the property through foreclosure removes your obligation — but you lose any equity and it may affect your credit or tax situation depending on the type of debt.
Bankruptcy: In extreme cases where total debt far exceeds assets, bankruptcy can discharge certain obligations. This is a major step that requires an attorney.
Donate the land: Some landowners donate land they can't sell to a charity or land trust that accepts encumbered property. Tax deduction potential exists but requires qualified appraisal and compliance with IRS rules.
Selling to a Cash Buyer with Liens
Cash buyers like Sell My Land US regularly purchase land with back taxes and liens. It's not a deal-killer — we just factor the payoff amounts into our net offer.
The process: 1. You request an offer, tell us about any known liens 2. We research the county records and estimate the payoff amounts 3. We make an offer that accounts for the lien payoffs — the offer reflects what you'll net after they're cleared 4. At closing, the title company pays the liens from proceeds before wiring your net
You don't need to bring cash to close. You just need to have enough value in the land to cover the liens and leave something for you.
If you're not sure what liens you have or what they amount to, a title company can run a preliminary search before you commit to anything. Call us or submit your parcel info and we can help you find out where you stand.
Request a cash offer on your land — or contact us at 928-928-4109. We handle liens and back taxes regularly.
See how our full process works.
Frequently Asked Questions
Can I sell land with delinquent property taxes? Yes. Delinquent taxes are a lien on the property, not a personal debt that blocks a sale. They're paid from your proceeds at closing. The title company handles the payoff directly.
How do I find out exactly how much I owe in back taxes? Contact your county treasurer's office — most have online portals where you can look up your parcel by APN and see the exact balance owed including interest and penalties. You can also call them directly.
Do I need to disclose liens to a buyer? Yes. In most states, known liens must be disclosed. Beyond the legal obligation, the title search will reveal them anyway — concealing a known lien you've already discovered doesn't work and creates liability.
What if the IRS has a lien on my land? IRS federal tax liens can be paid from closing proceeds, just like other liens. Alternatively, you can apply for a lien discharge on the specific property before closing. This requires dealing with the IRS directly — a tax attorney is advisable.
Will selling land with back taxes hurt my credit? Paying off the back taxes through a closing typically has no negative credit impact — you're resolving the debt, not defaulting. If the taxes had already progressed to a tax deed action, that's a separate matter. The sale itself, with liens paid at close, resolves the underlying obligation cleanly.