How can property taxes affect real estate transactions?

Unpaid property taxes can create liens against the property, which is critical to understand in the context of real estate transactions. When property taxes remain unpaid, the local government may place a lien on the property to secure payment of the owed taxes. This lien takes precedence over other claims or interests in the property, meaning that if the property is sold, any outstanding taxes must be settled before the seller can transfer clear title to the buyer.

This situation can significantly impact the marketability of the property. Potential buyers may be deterred from purchasing a property with existing liens due to the risk of inheriting the tax debt or facing complications in obtaining financing. Moreover, if the buying party does not address the unpaid property taxes, they could potentially lose the property through tax foreclosure, further complicating the transaction.

Understanding these implications is crucial for real estate professionals, as it affects the overall valuation, buyer interest, and the transaction's feasibility. Thus, the correct answer illustrates the importance of addressing outstanding property taxes in real estate dealings.