A lien on a warehouse or a truck yard can feel like a locked door when you want to sell. In most sales it is not one. Liens and unpaid property taxes are normally paid off from the sale money at closing. What decides how smooth that is: which kind of lien it is, how much is owed compared with the price, and how early the exact numbers are known. This post walks through the common kinds, the paperwork that clears each one, and the questions to bring to your attorney or accountant. It is general education, not legal or tax advice.
The Liens an Industrial Property Can Carry
Most liens on a commercial building fall into a few groups, and a title search is what finds them.
- A mortgage or other loan. As in any sale, the mortgage is paid off from the sale money at closing.
- The property tax lien. A property tax left unpaid can become a lien on the property itself, so the tax bills are one of the first things a closing checks.
- A federal tax lien. The IRS describes it as the government’s legal claim against your property when you neglect or fail to pay a tax debt, and says it attaches to all business property.
- A contractor or supplier claim. If a contractor or supplier goes unpaid for work on the building, that can turn into a claim against the property, and the rules differ from state to state.
- A judgment or a city charge. A court judgment against the owner, or unpaid city charges such as water bills, can also show up when the title is searched.
Ask your attorney what that means for your building.
Step One: Get the Exact Payoff Numbers Early
A payoff figure is the amount that clears a lien on a given day. A title company or closing attorney handles the title search and the closing paperwork. Even so, an owner who asks early has time to sort out a surprise before a closing date is set. Ask the lender for a written payoff letter, ask the tax office for the amount due, and ask any other lien holder for a written release figure. For a federal lien, the IRS lists its Centralized Lien Operation as the place to verify a lien, request a lien payoff amount, or release a lien.
Unpaid Property Taxes: How the Bill Grows, and How to Show What Is Owed
Texas is a clear example of how a property tax lien works, because its Comptroller spells the rules out in plain words. The Comptroller says a tax lien automatically attaches to property on Jan. 1 each year, and that a person who owned the property on Jan. 1 can be sued for delinquent taxes even if it has been sold since then. The same page says someone who buys real estate cannot obtain a clear title until all the delinquent taxes owed on the property are paid in full.
The cost of waiting is set out too. According to the Comptroller’s January 2026 newsletter, taxes still unpaid on Feb. 1 are delinquent, and on that day the tax collector adds a 6 percent penalty and 1 percent interest. The penalty then grows by 1 percent a month until July 1, when it becomes 12 percent, and interest keeps running at 1 percent a month with no maximum. If the taxing unit hires a private attorney to collect, the newsletter says that attorney can charge an additional penalty of up to 20 percent. So a tax bill left open keeps getting bigger while a sale is being worked out. Other states set their own penalty and interest rules, so ask the local tax office.
Some tax offices issue a tax certificate for a property transfer. In Harris County, home to Houston, the tax office’s request form offers tax certificates for property transfer purposes at $10 each. The same form gives a normal processing time of 2-3 business days once the office receives the request. Other counties use other names for this paperwork, so ask the tax office what the closing will need.
A Federal Tax Lien Does Not Have to Stop a Sale
The IRS can issue a certificate of discharge, which removes the United States’ lien from the property named in the certificate. That matters because the lien reaches all business property, while a discharge can take it off the one building being sold. The IRS uses three words that are easy to mix up, and each one does something different.
- Discharge. In the IRS’s words, a discharge removes the lien from specific property.
- Subordination. A subordination does not remove the lien but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage. The IRS publication on subordination says a loan consolidation or refinance often prompts that request.
- Withdrawal. A withdrawal removes the public Notice of Federal Tax Lien, but the IRS says you are still liable for the amount due.
For a sale, the discharge is the one to read about first. Paying the tax debt in full is, in the IRS’s words, the best way to get rid of a federal tax lien, and the IRS releases the lien within 30 days after the debt is paid. IRS Publication 1450 (Rev. 7-2018) adds that the copy of the release mailed to you will not show the official recording information, and that the recorded copy comes from the recording office where the release was filed. Your title company may ask for that recorded copy.
How a Discharge Application Works
IRS Publication 783 (Rev. 12-2022) says to apply on Form 14135 and to submit the application at least 45 days before the transaction date the certificate is needed. That window is worth knowing before a closing date goes into a purchase agreement. The publication also says you do not need a representative to request a discharge.
What the application asks for
- The deal papers. The form asks whether the proposed sales contract or purchase agreement, the title report and the proposed closing statement are attached.
- An appraisal. It asks whether the required appraisal by a disinterested third party is attached.
- The closing company and the money. It asks for the title or escrow company that will be used at settlement, the proposed property sale amount, and the proceeds the IRS can expect for application to the tax liability.
The IRS’s own worked example
Publication 783 shows the arithmetic for a discharge under section 6325(b)(2)(A), where the IRS is paid an amount not less than the value of its interest in the property being discharged.
| IRS example | Amount |
|---|---|
| Federal tax lien total | $203,000 |
| Property selling for | $215,000 |
| Minus encumbrances senior to the IRS lien | $135,000 |
| Minus proposed settlement costs | $15,000 |
| IRS lien interest paid from the sale | $65,000 |
| Tax debt still owed after the sale | $138,000 |
In that example the sale goes ahead, the lien comes off the property, and the rest of the tax debt stays with the taxpayer. Section 6325(b)(3) is a different route: a discharge may be issued if an agreement is reached with the IRS to let the property be sold, with the sale proceeds held under an escrow agreement subject to the United States’ claims, in the same priority they had before the discharge. Publication 783 also says a discharge may be issued when the government’s interest has no value, because the debts senior to the federal tax lien are greater than the fair market value or the sale value of the property. If the application is denied, the publication says you receive Form 9423 and Publication 1660 with an explanation of why.
Some Cities Add Their Own Sign-Off
Some cities want their own charges settled before a deed can be recorded. In Chicago, the Department of Finance says a Full Payment Certificate for utility charges is required in all transfers of real property, unless law or rule provides otherwise. The local page linked here covers that step in more detail.
What This Means When You Sell to a Direct Buyer
Every property is different. Gather the payoff letters, the latest tax bills and any lien notices you have, because a first conversation goes better with real numbers. Later: the deed, any leases and the rent roll, recent property tax bills, a survey, and any environmental reports you already have. Tell us the situation and we’ll factor it in. Asking for an offer is free, and you are not committed to anything unless you sign a purchase agreement.
Questions Owners Ask
Can I sell if there are liens or unpaid property taxes?
Usually, yes. Liens and unpaid property taxes are normally paid off from the sale money at closing.
What if the liens add up to more than the sale price?
Then something has to give – for example, the lien holders agree to take less or the owner brings money to closing – and sometimes the sale cannot go ahead; that is a conversation for your attorney. For a federal lien, Publication 783 describes a discharge for the case where the debts senior to the federal tax lien are greater than the sale value of the property.
Does a subordination let me sell?
Not by itself. The IRS says a subordination does not remove the lien, and its publication says a loan consolidation or refinance often prompts that request.
Is a lien the same as a levy?
No. The IRS says a lien secures the government’s interest in your property, while a levy actually takes the property to pay the tax debt.
Tell us about your property and we’ll get back to you.
Sources
Facts on this page come from the public sources listed at the bottom, read on the dates shown.
- Internal Revenue Service (IRS), Publication 783, How to Apply for a Certificate of Discharge From Federal Tax Lien, Rev. 12-2022 (read 2026-10-14).
- Internal Revenue Service (IRS), Understanding a federal tax lien, web page, last reviewed or updated 14-Sep-2026 (read 2026-10-14).
- Internal Revenue Service (IRS), Publication 784, How to Apply for a Certificate of Subordination of Federal Tax Lien, Rev. 12-2022 (read 2026-10-14).
- Internal Revenue Service (IRS), Publication 1450, Instructions for Requesting a Certificate of Release of Federal Tax Lien, Rev. 7-2018 (read 2026-10-14).
- Harris County Tax Assessor-Collector, Tax Certificate Request Form (for Platting/Construction/Property Transfer Purposes), Rev. 08/2025 (read 2026-10-14).
- Texas Comptroller of Public Accounts, Paying Your Taxes, web page (read 2026-10-14).
- Texas Comptroller of Public Accounts, Property Tax Today newsletter, volume 35, January 1, 2026 (read 2026-10-14).
- City of Chicago, Department of Finance, Full Payment Certificates, web page (read 2026-10-14).