Peeling Away The Layers Of An Onion Known As "Property Taxes"

Trying to gain insight into a specific property's taxes is like picking up an onion and peeling away layers to get to the information we need. At best, once you do get to the information, it can be outdated or inaccurate. It's very frustrating because the time you invest in extensive research could have been spent on other important priorities.

So, why is it so difficult to get property tax information that's current, correct, and reliable?

Property Tax Delinquency and Liens

When an owner fails to pay the required property taxes, the local government levies a tax lien on the property. That lien is then filed and recorded with the local governing office or agency. Jurisdictions have varying sets of regulations that govern liens. Liens are prioritized based on those regulations in the jurisdiction.

Lien Prioritization

Property tax liens are given priority over lenders (mortgages) or other liens on the property. When property taxes become delinquent, the governing body (national, state, country, or municipality) follows procedures prescribed by the state to sell the property to cover the delinquent taxes.

Although jurisdictions vary on regulations, they all remain consistent in commonly enforcing the same rules of lien prioritization.  

Tax Lien

Lien Priority

  • Superior
  • Superior has precedence over all Junior liens regardless of the date recorded.
  • Property tax liens
  • Assessment liens
  • Federal tax liens
  • State estate inheritance tax liens
  • Junior
  • Automatically considered inferior/subordinate to a Superior lien.
  • Junior liens are prioritized by date recorded
  • Federal income tax liens
  • State corporate income tax liens
  • State intangible tax liens
  • Judgment liens
  • Mortgage liens
  • Vendor's liens
  • Mechanic's liens

Where to Begin "Peeling" Away

When you need to find property tax information on a specific property, knowing where to start helps. There's an overwhelming amount of options that pops up after you do a search on a property. A Google search yields different places that are out in left field (not even close to what you need.)

There's no such thing as a single "repository" for property tax info. We all certainly wished there was! What you have to do is break things down into "bite-size" chunks to work on them one by one to get to the next step in your search.

Know Before You Go Searching

Before you even begin to locate places for the information you need, you must have a few things in hand to effectively have a starting point.

  • Property's address
  • Property owner's name
Property Tax Searching

Once you have those two things, you can move forward to learning more about the nuances of the county your property search is located in. Be prepared to interact with areas that don't handle "outside" inquiries very often. These areas are typically very rural in nature and may have the tendency to protect any information shared regardless of it being public or not. Patience and courtesy go a long way in cases like this.

Not every tax jurisdiction is going to have property tax information readily available online. You may be required to go in person to request the information. Be sure to have ample time to wait or peruse index cards or microfiche to find your information. Fees may be incurred to copy records.

Before visiting these jurisdictions, be sure to have the key person's contact information in that jurisdiction. That way, you aren’t caught off guard by speaking to the wrong person.

Key items you'll need to ask for from the right person in that jurisdiction.

Public Records of Mortgage Recordings

Mortgage records are publicly accessible, but to get the information will require a significant investment of your time. Most every county in the U.S. has an office and/or website where you can request those records. Smaller rural counties may not have a website, which, of course, would require you having to go in person. Larger counties that do have websites typically have a place on the site where you can request a mail-order of the records. There may be a fee to process your request to cover postage. 

Public Records of Mortgage Recordings

You can also access tax and assessment records on a property through a country registrar’s office. The information gained from these records won’t give you a definitive amount with regard to a mortgage on that property, but it will provide you with a range of what a seller’s mortgage balance is.

  • Exemptions and/or exclusions per the different classes of taxable properties.
  • Method by which property taxes are assessed.
  • Classification
  • Valuation
  • Equalization
  • Assessment
  • Tax Levy
  • Credits and abatements available
  • Due dates for tax

Variations of Jurisdictions When It Comes To Property Taxes

The beauty of our nation is the diversity of culture and ways of doing things. This attribute spills over into the way local government functions because of that diversity. One jurisdiction may not necessarily function the same way another does. So, we must work our way through the veil of those entities.

The language used regarding property taxes may be termed differently in a jurisdiction, so keep that in mind. Different states have different titles for governing bodies of property tax.

The Different Names of Property Taxes

  • Property tax
  • ad Valorem taxes
  • Real estate tax
  • Millage

Property Taxes May be Handled by:

  • County
  • Municipality
  • Township
  • Special District
  • Parish (Louisiana only)

Local Government Property Tax Entities

  • Tax Assessor
  • Tax Assessor-Collector
  • Tax Collector
  • Commissioner of Revenue
  • Appraisal District

States with "Unorganized Territories"

As if things aren't getting confusing enough, we also need to point out that some states have what's called "unorganized territories." These areas do not fall under the local or municipal government. Property taxes within these areas might be handled by another local governing body.

Maine, for example, is one of 10 states with unorganized territories. Property taxes in Maine are handled either under Municipal Services or Unorganized Territory.

Unorganized Territories

Other states that have unorganized territories include:

  • Arkansas
  • Indiana
  • Iowa
  • Louisiana
  • Minnesota
  • North Carolina
  • North Dakota
  • Ohio
  • South Dakota

Public Records

Property tax information is accessible by the public. When you do begin your search through public records, remember that the information you get may not be accurate or current.

Inaccuracy of Public Records

Variables that impact the accuracy and currency of property taxes include:

  • Tax rates going up or down.
  • Changes made to a property.
  • Data discrepancy (errors, exemptions, etc.)
  • Frequency of data updates by jurisdiction.
  • Payment of tax liens made that have not cleared the system
  • Abatements
  • Deferrals
  • Credit
Inaccuracy of Public Records

Property owners who are vigilant in ensuring their records are correct are a godsend for public records. But honestly, how many property owners do you know who audit their own records? Some owners don't because the process can be intimidating, and as a result, their escrow begins to falter, causing taxes to become delinquent with the possibility of a tax lien. Once the tax lien hits, they make a payment. However, if that payment has not cleared the system at the time you obtain property tax information on that property, you will get wonky information that's incorrect. You may see the arrears, but you won't know that it's been paid because it may take time to clear.

The frequency of data updates varies in jurisdictions. While most counties are quick to release pertinent data, others that are small or in rural areas take longer (up to a few months!) So, if you are searching for a property in the middle of nowhere, remember, you may not get current info.

Exemptions of property taxes may not be reflected accurately on a property. Some states have exemptions in place that you should be aware of when searching for property tax info. Again, if the jurisdiction doesn't have this correctly recorded on a property, you are left with inaccurate data.

  • Disabled veterans
  • Retired military
  • Disabled People
  • Seniors over 65 years of age
  • Homestead

The Mechanics of Jurisdictional Property Taxation

Jurisdiction officials responsible for property taxation follow a set of statutes in administering those taxes. State-level agencies are typically limited in playing a role with valuations of properties. Local officials are key players when it comes to appraising and assessing real property.

The Framework

Property taxes are administered and maintained through a network of officials. These people are required to have a full understanding of property tax statutes to responsibly carry out an assessment, valuation, exemption, cycles of reassessment/reappraisal, and taxation. Legislative policies to ensure local officials are aware of changes that affect the property tax system.

Property Data

Information regarding valuation, transfers, ownership, description, and relevant data to a property is maintained. Data collected is analyzed against the valuation of real property. Such data includes structure measurements, number of rooms, age, square footage, and type of construction. Further analysis takes into account zoning, prices of properties listed and sold. Appraised values reflect the data resulting from the analysis. Audits and compliance reviews are continually practiced to ensure all data aligns with state regulations.

Property Assessment

Property Assessment

Assessments are based on the current market value of a property. Annual recurring taxation of a property falls within the purported underlying value of the property. Doing so leverages maximization of fairness within a property tax system.

Property Appraisals

Appraisers perform field appraisals of properties that include calculations of structures while taking into account the property value, land valuations, and reconciliations of values.

State Level

State regulators monitor the performance of jurisdictions. They set the standards which those jurisdictions follow with regard to imposing property tax, assessing property values, appraising properties, and enforcing tax laws.

A Look at States With High and Low Property Taxes

If you are entertaining investments in another state, it helps to know what the property tax climate is!

[The writer created an infographic to be used right here. The link to the infographic can be found here. And this is the source of the information.]

Reduce Your Risk!

If you are doing some investigating on property tax information for a property of interest, all we can say is do your homework! The deeper and longer you dig for accurate tax information pays off by reducing potential risk; even then, there’s no guarantee the information you get is correct.

A Great Example:

  • The Jones' purchased a home in 2017 for $162,000
  • The lender filed the mortgage through the local governing office, where it was recorded.
  • In 2018, they took out a second mortgage for $25,000
  • The lender on the second mortgage filed the mortgage through the local governing office where it was recorded.
  • They defaulted on the second mortgage and were $1,000 in arrears for property taxes.
  • A property tax lien was placed on their property.
  • The local governing tax office filed the lien with the appropriate office where it was recorded.
  • The property went into foreclosure and sold in 2019 for $183,000

Proceeds from the sale of the home were distributed by "priority."

  1. 1
    Property tax ($1,000) - Superior
  2. 2
    1st Mortgage from 2017 ($150,00) - Junior
  3. 3
    2nd Mortgage from 2018 ($25,000) - Junior

The lender of the second mortgage was at a higher risk. For them to be paid off, the home had to sell for at least $179,000, which, even at that amount, was not a guarantee!

Get the RIGHT Stuff!

Do you honestly want to "ride the wave" hoping you get the right information on a property's taxes? Better yet, do you have the time it takes to peel away the numerous layers to get to what you're looking for?

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The days of working your way through the maze of jurisdictions, inaccurate or outdated data, tax liens, and delinquency are gone! Make informed decisions while reducing your risk. Get access to our premium software where you can have a major advantage in the industry with our 3-DAY PASS!

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