Title issues
Tax lien and tax lien sale certificate
Unpaid property taxes and City charges become a lien, and the City can sell that lien. How a tax lien certificate surfaces before a closing and how it clears.
What is a tax lien sale certificate and how does it affect a sale?
Quick Answer
Lien · Blocks the closing until it is resolved
How is it found?
- The tax search returns arrears, an open charge, or a lien sold to a certificate holder rather than held by the City
- The property appears on a published tax lien sale list, or a lien sale notice was mailed to the owner of record
- Unpaid water and sewer charges, emergency repair charges or other City charges appear alongside the property tax arrears
- A servicer escrowed and paid the taxes, but a separate charge outside the escrow went unpaid and accumulated
- A lien foreclosure action has been commenced by the certificate holder and shows in the county clerk index
How is it cured?
- Order a current tax search close to closing rather than relying on the one ordered at contract, because interest accrues daily
- Identify who actually holds the lien, since the payoff comes from the certificate holder once the lien has been sold
- Obtain a written payoff good through the closing date and pay it from proceeds at the table
- Confirm the release or satisfaction is filed so the charge clears the record rather than merely showing paid
- Where the owner qualifies for an exemption, a payment agreement or a hardship deferral, address that before the lien sells rather than after
- Where a lien foreclosure has started, treat it as litigation with a deadline and calendar the closing around the court schedule
What does clearing it cost?
The payoff is the arrears plus the interest and the surcharges the certificate carries, and that interest is the reason this item gets worse the longer it sits. Beyond the payoff there is little professional cost in the ordinary case, because it is a payoff and a release rather than a proceeding. A commenced lien foreclosure changes that.
Who pays for it?
The seller. Taxes and City charges that accrued during the seller’s ownership are the seller’s, and they are ordinarily apportioned as of the closing date on the closing statement, with the payoff wired from the seller’s proceeds.
Which charges can end up in a NYC tax lien sale?
Property tax arrears are the obvious one. Water and sewer charges, emergency repair charges and certain other City charges can also become liens on the land and can be included, subject to the eligibility rules the City applies. That is why the tax search and the municipal search are read together rather than separately.
Does a tax lien survive the sale of the property?
Yes. It attaches to the land, so it follows the property to the new owner unless it is paid off and released at the closing. That is the whole reason the payoff is obtained in writing and the release is confirmed, rather than the parties relying on a receipt showing the arrears were paid.
What happens if nobody pays the certificate?
The certificate holder can bring a proceeding to foreclose the lien, and the owner can lose the property. Long before that, the accrued interest and surcharges can outgrow what the original arrears were, which is why an old unpaid charge discovered in a tax search is treated as urgent rather than routine.
What else should you read before closing?
In the glossary
- Tax searchThe search reporting property tax status, water and sewer balances and municipal charges. Its results drive the tax adjustments shown on the closin...
- LienA claim against property securing payment of a debt. Liens rank by priority, and closing normally means paying or releasing every one ahead of the ...
- Assessment (co-op or condo)A charge levied by a co-op or condominium board beyond ordinary maintenance or common charges, typically to pay for a capital project. It is disclo...
- Municipal searchThe record search covering agency violations, municipal arrears and occupancy documents for a property. It runs alongside the land records search r...
- Foreclosure searchA record search for foreclosure actions touching the property or the current owner. Prior foreclosures in the chain often need extra proof that eve...
- Marketable titleTitle a reasonable buyer would accept, free of defects that would expose that buyer to litigation. Most New York contracts require the seller to co...
Questions this raises
- What happens if the title search finds a problem before closing?Schedule B-I requirements are the punch list, not a dead deal. How New York closings clear old liens, missing satisfactions and name hits before th...
- What is curative title work?Curative work clears Schedule B-I before closing: payoffs, missing satisfactions, heirship affidavits, ACRIS indexing fixes and escrow holdbacks in...
- How long does a title search take?Three to five business days for a clean NYC house or condo, longer for co-ops, estates and multi-parcel files. What slows a New York title search d...
Title issues
- Unpaid water and sewer chargesWater and sewer arrears become a lien on the land in New York City. How the final reading works, how the charge clears, and why it is usually escro...
- HPD emergency repair charge lienWhen HPD repairs a condition an owner did not, the cost becomes a lien on the building. How the charge is found, disputed, cleared, and paid at clo...
- Judgment lien against the sellerA docketed money judgment attaches to New York real property the seller owns in that county. Here is how it surfaces, how it clears, and who pays it.
- OATH (formerly ECB) judgment lienAn unpaid summons from OATH, formerly ECB, becomes a docketed judgment the City enforces against the property. How it is found, cured, and who pays...
The violation code
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Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.