Top Tax Lien Searching Questions – Answered!

Tax lien searching can be confusing. There are a lot of variables to consider and CLAS 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 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 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