Federal Tax Liens Vs Mortgage: Which One Takes Priority?

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When it comes to managing different tax-related issues such as paying dues, filing returns, and handling liens, levies, and mortgages, it is extremely important to set the right priorities to avoid IRS tax problems. Two of such issues that demand immediate attention are tax liens and mortgages. A tax lien refers to the government’s right to claim your property due to the failure to pay your taxes, while a mortgage is a legal agreement through which you take a loan from a lender while putting up your property’s title as security. In this blog, we take a look at Federal tax liens and mortgages with a view to establishing the one that takes priority.

Types Of Liens In Real Estate

As mentioned above, liens entail the right to own someone’s property until they pay their dues. When it comes to real estate, there are three different types of liens you must know. They are:

1) Tax Liens

Placed on a property due to unpaid real estate taxes

2) Mortgage Liens

It is a voluntary, specific lien

3) Mechanic’s Liens

Placed on property for not clearing payments for the work done on the property

Related Blog Post: Tax Liens: What is a Tax Lien Certificate?

Which Is More Important – Mortgage or Federal Tax Liens?

The IRS considers a mortgage valid under local laws and ensures it is protected even if it arises after a tax lien has been filed against the specific taxpayer. Failing to pay your federal tax dues can lead to the IRS filing a Notice of Federal Tax Lien with the taxpayer’s county clerk’s office to place a lien on your property.

What Are The Most Important Liens?

The biggest and most important liens placed on properties are voluntary liens such as a mortgage. A mortgage is basically a voluntary lien placed by the lender or bank against a taxpayer’s property that allows them to take ownership of the house as compensation if the borrower fails to pay back their loan.

How to Decide Which Lien Should You Pay First?

As per California’s law regarding lien priority, you should follow the “first in time, first in right” method. The best tax attorneys in Fort Worth recommend following the same approach and always prioritizing the lien that comes in first followed by the others.

Related Blog Post: Worried about IRS Problems? The IRS Fresh Start Program May Help

What is a Special Lien?

When the possessor of certain goods retains the goods due to some unpaid dues, the lien placed is considered a special lien. The possessor has the right to hold on to the goods until the due amount has been cleared.

Difference Between General and Specific Lien

A general lien refers to liens placed on all property, while specific liens are only placed on a certain asset.

Some Examples of Specific Liens

A few examples of specific liens are property tax liens, mortgage liens, and mechanic’s liens. As mentioned above, property tax liens are placed due to failure to pay taxes, while mortgage lien is placed when a mortgage has been used for financing. Mechanic’s liens are placed due to failure to pay for work done.

What Is Lien Position?

The position of a lien on the ranking list according to which liens are prioritized is known as the lien position.


It is strongly advised to timely manage finance-related aspects of your life. It helps if you know what to prioritize when you face IRS tax problems. When looking for seasoned tax lawyers in Fort Worth, contact our team of proficient IRS tax attorneys at Law Offices Of Nick Nemeth to avail some of the best solutions. Give us a call at (972) 426-2553 for a free consultation or fill out our Contact Form and our IRS tax attorneys will get back to you at the earliest.