What type of lien is placed on property due to a homeowner's failure to pay property taxes?

A lien placed on property due to a homeowner's failure to pay property taxes is known as a tax lien. This type of lien is specific to the government’s right to collect unpaid taxes owed on the property. When property taxes are not paid, the local government can place a lien on the property, which means they have a legal claim against it until the owed taxes are paid. This lien takes priority over most other types of liens, including mortgage or judgment liens, meaning that if the property is sold, the tax lien must be settled first from the sale proceeds.

Understanding the nature of a tax lien is critical for both homeowners and mortgage loan officers. It highlights the risk associated with failing to pay property taxes, which can lead to foreclosure or a forced sale if the tax obligation remains unpaid. In contrast, mortgage liens are created when a property is financed with a loan, judgment liens typically arise from legal judgments against a debtor, and contract liens result from the failure to fulfill a contract obligation. Each of these other lien types has different implications and processes compared to a tax lien.