What is a car lien? How to check if there’s a lien on a car?
When buying a used car, be sure to check whether the car has a so-called lien on it. What is a car lien? A notice of tax lien, usually released due to tax arrears, on the ownership of a car is potentially a big problem for the new owner. The tax liability in this case follows the subject of the tax lien, that is, a car which can even be taken away due to the tax arrears of the previous owner.
*The information given in the article concerns only the Polish law
What is a car lien?
The purchase of a used car should be preceded by a thorough examination not only of its technical condition, but also of its formal and legal status. One of the important pieces of information in the latter case is the possibility of placing a so-called lien on the vehicle.
Liens are used by offices to enforce due taxes, social insurance (ZUS) contributions, as well as fines and tickets. If a lien was placed on a car, then, for example, the tax office, social insurance (ZUS) institution or other state administration unit has the right to sell it in order to pay tax arrears in this way. For the buyer of a used car, whether a lien is placed on a given car or not is very important.
When is a lien created?
Unpaid tax liabilities pose a risk that the taxpayer might receive an entry in the register of tax liens. In such situation, the tax authority may create a lien due to tax arrears. The entry in the register of liens may concern movable property or transferable property rights.
A lien is created at the time of entry in a special register. It is placed, for example, by the tax office on property, including a car, of a taxpayer who delays the payment of taxes. The entry in the register is a consequence of a tax decision issued by the relevant office – most often determining the amount of tax liability, e.g. tax on undisclosed income, but also arrears or interest for late payment.
The notice of a lien is made at the request of the authorized person to act on behalf of the State Treasury or a local government unit, e.g. the head of the tax office. A lien may be established not only on property owned by the taxpayer, but also on property subject to joint ownership.
In addition to movable properties, a lien for tax arrears may also be established on transferable property rights. A lien is established on a car worth at least PLN 13.900, and the owner must be informed about the notice in the register of tax liens.
This amount applies to individual properties and rights. Properties or property rights which get to the register of liens due someone’s tax arrears as a result of the delivery of the tax authority’s decision are, as it were, seized for tax arrears. This significantly limits the right of ownership of movable property in the form of, for example, a car, and also other movable and transferable property owned by the taxpayer. Surely no one wants to have a lien. You don’t pay taxes? For such arrears, a tax lien is due, even on the property or property rights of the wife or husband – constituting joint ownership of the taxpayer.
Can a lien be “inherited”?
A lien is most often created for an unpaid tax liability on movable properties and transferable property rights and “follows” the subject of the lien.
What does this mean? It also burdens a car when its property is transferred to a person who has no tax arrears. Therefore, a lien has consequences for each owner of the lien subject.
For the new owner of such a car, this means a big problem – it would be useless to explain that the new owner did not know about the lien, because the office can still bid on such a vehicle after the change of the owner. It may turn out that already during registration in the communication department you might get a negative decision and you will not register such a vehicle. The creditor, e.g. the tax office or the social insurance (ZUS) institution notifies the communication office about the lien, but this information is not entered in the vehicle registration book.
Failure to inspect the car for a lien before buying can have serious financial consequences for the new, unaware owner. First of all, a lien follows the property, not the owner – this means that the debtor can sell the car charged with a lien, and the buyer will have to return this car to the debts of the previous owner.
In this case, it does not matter whether the new owner knew about the lien when buying a car or not.
It’s good to remember that there may be several tax liens on a given vehicle, if someone delays, for example, with the payment of taxes and social insurance (ZUS) contributions.
Check the car before buying it – where to look for a notice in the lien register?
Lien information is also included directly in the autoDNA report along with a number of other useful information about the vehicle. The information about any possible lien on a given vehicle is published by autoDNA for free within the range of data available before purchasing the report.
Tax lien – Vehicle History Report autoDNA
The register of liens is kept online and any vehicle can be checked for free on the website of the Register of liens maintained by the Ministry of Finance.
Car lien
The car has a lien – should you buy such a vehicle?
An entry in the register of liens is a serious legal defect of the vehicle and the purchase of such a car is potentially a big problem for the new owner.
It may also happen that the lien has already been removed, because, for example, the debtor has returned the money due for taxes, fines, tickets or social insurance institution (ZUS) contributions. Therefore, checking the car before buying for a possible lien is of great importance to the potential buyer.
Liens are used by offices to enforce due taxes, social insurance (ZUS) contributions, as well as fines and tickets. It also burdens the car when its property is transferred to a person who has no tax arrears. Therefore, for the buyer of a used car, whether a given car has a lien or not is very important.
How to check if the item is encumbered with a lien?
The autoDNA vehicle history report offers a new functionality – checking the lien registers with the VIN number along with other information about a given vehicle. This can also be done through the register maintained by the Ministry of Finance https://www.finanse.mf.gov.pl/web/wp/pp/rzsw, and in the case of cars, check the autoDNA database with the VIN number.
Tax lien – lien deletion reported
Did you like this article? Anything you’d like to ask in your comment? Feel free to share your feedback and comment at the bottom of the article. And remember – always before buying a car, motorcycle or even a trailer – check vehicle history and free VIN lookup with autoDNA based on the VIN number. VIN check is one of the most important things to do before deciding to buy a used vehicle. Thanks to this, autoDNA helps you make an informed decision.
What is not subject to a lien?
A notice of lien is a serious burden, but it does not cover all elements of the property. A lien cannot be placed on those rights which can be encumbered with a mortgage, and therefore cannot be established on real estate.
Therefore, the right of ownership of real estate cannot be covered by a lien, but for cars owned by the taxpayer, a notice in the register of liens can be made.
Can a lien expire? If yes, when?
The removal of a lien is possible in several cases.
First, a lien ceases to apply when the taxpayer pays back the tax liability on the
basis on which it was established. This means that on the date of expiry of the tax
liability, the car is removed from the lien register. A lien always concerns a specific
tax liability, e.g. for a tax return, VAT, social insurance, or property tax. A lien will also
be removed when the subject of a lien is sold in the enforcement or bankruptcy
proceedings.
How does the removal of a lien look like?
The removal of a lien may take place on the basis of an application of a person who, at the time of its establishment, was not its owner. An application for removal may be submitted by the taxpayer responsible for the secured tax if, on the date of establishing the lien, they did not have the right to own the encumbered movable property (including cars, if, for example, they sold them earlier) or a transferable property right.
The same request may also be made by a person claiming their right of ownership of encumbered movable property or a transferable property right. What's the condition? Movable property, e.g. a car or a transferable property right, was not the property of the taxpayer on the date of establishing the tax lien to the taxpayer responsible for the tax thus secured.
