Short answer
Yes. Back taxes and liens do not stop a sale. They usually have to be paid from the proceeds at closing. The City says a lien can make a house harder to sell, so start with an up-to-date payoff figure and ask a title company or attorney what will be paid and in what order.
Liens come along with the property
The City of Philadelphia explains that a lien is a legal claim against a property because of a debt owed. The City files liens against delinquent properties every year or more often for unpaid property taxes and water charges. It says a lien can make the property more difficult to sell or to use for a loan. That is a hurdle, not a ban.
Getting the numbers
Ask the City for an accurate current balance on taxes and any water charges. The figure changes as interest and penalties accrue. A title search will also show liens that are recorded against the property. With the numbers in hand, you can see how much equity is left after the payoff. Request a payoff figure that is good through your expected closing date. Taxes and water charges change as interest accrues, and a number that is correct today may be off by closing. Ask the City how to get an updated figure close to the closing date, and tell the title company who to call. If the buyer is a cash buyer who can close quickly, the payoff will change less. Either way, build a small cushion into your estimate.
Payment plans before you sell
The City has an Owner-Occupied Payment Agreement for owners who live in their homes with delinquent real estate taxes. It says there is no down payment required. Enrolling means the property is safe from sheriff sale. If you plan to keep the house, that is worth a look. If you plan to sell, a plan can buy time to find the right buyer.
Running the numbers
Here is a hypothetical to show how it works. Suppose a house sells for $200,000. The mortgage payoff is $90,000. Back taxes and water charges total $12,000. The seller's half of the transfer tax at the City's 4.578 percent rate is $4,578. That leaves $93,422 before other closing costs. Your numbers will differ. The point is that the lien is paid from the proceeds and the rest is yours. If the liens plus the mortgage exceed the price, you would need extra cash or a deal with the lienholders. Ask the title company to run a net sheet before you accept any offer.
Selling with the debt
A cash buyer can purchase a house with tax liens if the sale price covers the payoff. Kaizen Home Buyers makes as-is cash offers within 24 hours, with no repairs and no agent commission, and can close in 14 to 30 days or on your date. Call 267-329-0084. Listing with an agent works too if the house is in decent shape. In either case, the closing agent will pay liens from the proceeds.