Tax lien searching can be confusing. There are a lot of
variables to consider and
CLAS Information Services has found that our clients have questions. Here
are answers to our most commonly asked questions on tax lien searching:
Why Should I Search
for Tax Liens?
Before funding a deal, it is important for a lender to know
about an applicant's existing financial obligations, especially those that
could represent a competing claim.
Federal Tax Liens and
State Tax Liens are a factor in determining priority of claims and can jeopardize a lender's ability to collect
in the event of a debtor bankruptcy.
Additionally, Federal and State tax liens are nonconsensual
liens, meaning there is no agreement between the lienholder and the taxpayer.
In fact, a tax lien can be filed without the taxpayer even knowing about it, so
a Federal and State tax lien search may be the only way for a lender to learn
about a tax lien before it's too late.
Where Do I Search for
Tax Liens?
A taxpayer's primary address determines in which state a tax
lien would be filed, but each state independently decides what filing office(s)
in their jurisdiction will administer tax lien records.
Some states elect to have tax liens filed at the state level
(i.e. Secretary of State or equivalent) while others accept tax liens at a
county-level filing office such as County Recorder or even at a court. In some
states, the filing office further depends on whether the taxpayer is an
individual or a business.
Do Name Variations
Matter in Tax Lien Searching?
When a Secured Party files a
UCC Financing Statement, it
must list the debtor names according to strict Uniform Commercial Code rules or
the filing will be not effective to perfect its security interest.
Government agencies are not held to the same strict standard
when filing tax liens. In many cases, tax liens maintain priority even if the
lien lists a variation of the taxpayer's legal name - so it is important to be
sure your
tax lien search will report tax liens filed under similar names.
For help in ordering a tax lien search, contact
CLAS Information Services today!
For over 35 years, CLAS has been helping financial institutions, title
companies, attorneys and others coordinate due diligence search efforts and
close transactions with confidence. 800.952.5696 |
connect@clasinfo.com
