Almost all transactions in the Singapore property market come with a fair amount of risks. When there is a tax lien in the mix, however, you should be more vigilant. Many tax lien home buyers have found themselves in a tight fix as a result of the complications and costs involved before they really own the property in question. It is, therefore, important to be aware of some of the pitfalls accompanying tax lien home buying and how to avoid them before you make any commitments.
Understand the Reasons for Tax Lien
One of the main reasons for tax lien on a home is failure by the owner to pay property taxes to the local government on time. When the debts pile up over time, the latter has a right to charge interest on them. Furthermore, the local government can sell the debts together with interest to third parties. It then becomes a matter in which even the state or county government is involved. It is important to have in mind the fact that interests as well as the period after which they are charged are determined by the state in which the property is located.
Know the Amount Owed
Many sellers are reluctant to provide full financial information concerning the property to buyers. It is important to know the kind of deal you are getting into before you agree to buy a home. If you discover that there is a tax lien attached to the property, determine whether the amount of money you will pay can comfortably offset the tax debts as well as mortgage if any. By all means seek a concession with the seller on how to clear any bills attached to the home before you close.
Get Title Insurance
One of the best ways of avoiding losses in the Singapore property market is buying of title insurance. It can act as protection against unfortunate eventualities such as having to deal with any kind of lien. It is advisable, nevertheless, to ensure that you contact your insurer before the sale is closed. If there is discovery of liens after you have already committed yourself, you most probably will have to face it alone. The insurer will clear any overlooked liens if you had bought the insurance before they were revealed.
Property tax liens always spell trouble for buyers. Remember that not all tax liens are a result of financial incapability. Still, the obvious fact about a property that has a tax lien attached to it is that it may also be poorly maintained. In many cases, the best solution for tax lien home buyers is to just walk away from the deal. However, you can solve the problem if you, the seller and other parties involved, agree on a fair way of settling the bills.