What is a tax lien?

A tax lien is specifically defined as a legal claim against a property due to unpaid property taxes. When a property owner fails to pay property taxes, the government can place a lien on the property as a way to secure the payment of those taxes. This lien gives the government the right to collect the debt owed, and it can also affect the property owner’s ability to sell or transfer the property until the tax obligations are settled.

Understanding the nature of a tax lien is critical in real estate transactions, as it can impact the title of the property. Buyers must be aware of any existing liens because they can inherit these tax liabilities along with the property. This distinction underscores why the other options are not applicable; a mortgage on commercial property is related to financing, an agreement between investor and lender pertains to investment arrangements, and a type of contract in residential leasing addresses rental agreements, none of which align with the concept of a tax lien directly related to unpaid taxes.