As a leading provider of a full range of title and escrow services, we come across liens all the time. The bad news? Liens are one of the most common conditions that slow down a real estate transaction. The good news? In most cases, there is no need to panic, especially when you are working with an experienced and reputable title company like True Concept Title. Keep reading to learn about the many different types of liens and their impact on your real estate transfer…
What is a Lien?
In general, a lien is a legal notice that is put on file as the consequence of an unpaid debt. It is a process created by legislature designed to secure debts that most often include real estate, and in rare cases, other personal property.
A lien is a tool used by creditors to collect payment which is a requirement before a property can be sold. A property lien may come from either unpaid taxes, a judgment made in court, or from past unpaid construction bills, for example, pool subcontractors.
A property lien may come from either unpaid taxes, a judgment made in court, or from past unpaid construction bills, for example, pool subcontractors.
Different Types of Liens
It is important to note that lien procedures vary state-to-state. The most common types of liens include:
A judgment lien can be placed on real estate or other property when a creditor files a lawsuit and wins the court judgment. A judgment lien may also be imposed by an attorney who was not paid for legal services.
Property Tax Liens
If an individual fails to pay federal, state, or county taxes, the government can file a property tax lien for the amount that is owed on the property. Regardless of when the property tax lien was placed, it will always take precedent over other mortgages and/or liens on a property. Because the government can sell your property to cover unpaid taxes, lenders will often pay the taxes themselves to protect the mortgage – a dollar amount that will be added to the existing debt.
If an individual fails to pay taxes, the IRS can place a lien on the property especially if they are unable to garnish wages due to unemployment.
If a general contractor, carpenter, plumber, or other repair company isn’t compensated within one to six months upon completion of the job, a lien can be placed on a property. In addition, a contractor has the legal right to sue and have the lien enforced within one month to six years and potentially force the sale of a property.
Child Support Liens
The recipient of unpaid alimony or child support can put a lien on a property until he or she is paid or if the property is sold (via lien sale) or refinanced.
Family Law Real Property Liens
In certain states, such as California, a spouse may file a lien against his or her real estate interests to pay attorney fees in a marital action.
While the homeowner will be notified if a lien is placed on their property, they may not always let the buyer know before it gets to transfer the title for a sale to be completed. Our national title experts will do a thorough search to make sure that you have a clear title for the property upon purchase. Our attention to detail is what sets us apart from others in the industry and why many mortgage brokers and real estate agents recommend us to their clients every day.
Preparing for a Clear Title & Property Transfer
If you are selling a home in which a lien has been placed, it is critical to contact an experienced title company who can help resolve lien issues so the real estate transaction can move forward. At True Concept Title, we specialize in a full range of title and escrow services, including the retrieval of documents such as recorded and unrecorded liens.
To learn more about our services, contact our nationwide title and escrow service at 866-651-6224!