In previous blog posts, we have discussed the importance of searching for tax liens as part of a standard pre-funding due diligence investigation. To recap, there are two main reasons why it is critical to search for tax liens. First, tax liens are a factor in determining priority of claims and secondly, they are involuntary in nature, meaning that a debtor may not even be aware of a lien’s existence. As with any public record search, it is important to perform tax lien searches in the right filing offices. What follows is an overview of where to search for tax liens.
For tax liens, the taxpayer’s principal address determines the filing location. When searching for tax liens then, you will search in the state where the taxpayer holds their principal address. It gets a little tricky though. There are no nationwide rules for what filing office administers tax lien records; rather each state independently decides where tax liens will be filed in their jurisdiction. Within the state where the taxpayer holds their principal address, a tax lien may be filed at the state-level, or the county level, or sometimes both.
State governments attempt to set standards for where tax liens are to be filed based on whether the taxpayer is a business or individual. However, when searching the tax lien records, we tend to find them mixed together regardless of what records the filing office is supposed to administer, regardless of whether the taxpayer is a business or individual.
In California for example, according to statute tax liens on businesses are filed at the Secretary of State’s office while tax liens on individuals would be filed at the County Recorder’s office. What we actually find though is that both filing offices accept liens on businesses and individuals. As a result, an exhaustive tax lien search here would include a search of both the state and county filing offices.
Another important thing to keep in mind when searching for tax liens is that they may be maintained on a separate index from a filing office’s UCC records. In these cases, a separate search of that secondary index will be required to locate involuntary liens.
Tax Lien and Judgment Lien searching can be confusing because of all of the different variables that come into play. It’s a good idea to work with a service provider you trust to carry out your tax lien searches. First Corporate Solutions works with a highly trained network of local search agents to deliver search results you can count on. Contact us today to learn more about our nationwide search services or to place your order today! 800.406.1577 | email@example.com