When is a tax lien valid against third parties such as purchasers or mortgagees?

When is a tax lien valid against third parties such as purchasers or mortgagees?

• A. Upon assessment
• B. Upon filing the lien with the Register of Deeds
• C. Only after a court judgment
• D. Only if the taxpayer consents

Answer: (B)

A tax lien becomes enforceable against third parties only when it is filed in the land records, such as with the Register of Deeds. The lien itself starts from the assessment and creates a claim against the taxpayer’s property, but filing with the Register of Deeds provides public notice to the world—buyers, lenders, and others—about that claim. This notice is what makes the lien binding on third parties, because they are expected to know about liens recorded in the official records. Without this filing, a purchaser or mortgagee might take title or money without awareness of the tax debt, but once the lien is filed, the government’s claim is recognized against those third parties as well. It does not require a court judgment or the taxpayer’s consent to become effective against those outside parties.

A tax lien becomes enforceable against third parties only when it is filed in the land records, such as with the Register of Deeds. The lien itself starts from the assessment and creates a claim against the taxpayer’s property, but filing with the Register of Deeds provides public notice to the world—buyers, lenders, and others—about that claim. This notice is what makes the lien binding on third parties, because they are expected to know about liens recorded in the official records. Without this filing, a purchaser or mortgagee might take title or money without awareness of the tax debt, but once the lien is filed, the government’s claim is recognized against those third parties as well. It does not require a court judgment or the taxpayer’s consent to become effective against those outside parties.