Latest Facts and News
- As of 2024, online property lien searches have become increasingly accessible, with many counties offering digital records.
- Recent changes in tax laws have impacted how tax liens are reported and enforced on properties.
- The COVID-19 pandemic has led to an increase in property liens due to financial hardships faced by homeowners.
- New technologies, such as blockchain, are being explored to streamline the lien recording and searching process.
Buying a property is something most people look forward to, whether it’s for a home or a business. But the process isn’t always simple. From paperwork to inspections and financial approvals, there’s a lot to handle. Among all these steps, one thing stands out as critical: check liens on property.
Liens can complicate the process, causing delays, legal issues, and unexpected costs. This guide focuses on what you need to know to check liens on property and deal with them quickly, so you can keep your plans on track without unnecessary hassle.
What is a Property Lien?
A property lien is an official or legal claim made against property with regard to an unpaid debt. This lien enables the creditor to take possession of the property in the event of the debtor’s default on the debt. When the lien is still in force, the owner of the property cannot sell or transfer ownership of the property to another without first clearing the debt.
Liens can be created out of defaults like taxes, mortgages, or judgments that are given by courts. This will be covered in more detail later in this blog post.
Moving ahead, these liens are then filed in public records, informing any potential buyer or other interested party of the pending financial claims against the property. This transparency prevents manipulation in property dealings and also protects the lien holder rights of the creditors.
How Liens Affect Property Transactions
Liens are claims against a property that can influence the purchase, transfer, or refinancing of a property. It is important to know the concept of liens because they can become an issue for all the parties involved in property deals.
Impact on Buying a Property
- Title Complications: There are links between property and title, which make it difficult to define the ownership status of a property. Liens could be left to the buyers if they are not cleared before the purchase of a property, causing title defects that complicate ownership transfer.
- Financing Hurdles: Most lenders are hesitant to provide mortgage loans for properties with existing liens because they consider such properties high-risk.
Impact on Selling a Property
- Delayed Transactions: Sellers must address and clear any liens before transferring ownership, which can delay the closing process.
- Reduced Buyer Interest: Ownership of properties with liens can be an unattractive prospect to potential buyers because of the problems and complications associated with them.
Impact on Refinancing a Property
- Approval Challenges: The term ‘lien’ poses a challenge to the refinancing process because new lenders need a title free from property encumbrances before they can advance money for a property.
- Increased Costs: Clearing liens for the refinance may incur other costs that make the whole process of refinancing not very beneficial.
Methods to Check Liens on Property
Curious about how to find out if there’s a lien on a property? Don’t worry—it’s easier than you think. There are three simple ways to check liens on property, and each comes with its own benefits, downsides, and costs.
Check Local Records
Liens are public records, so your first stop should be your county recorder’s office or clerk’s office. They keep track of all property transactions, including active liens.
- How to Search: Many counties offer free online tools for searching property records. You might need to create an account to access them, and if you want a copy of the lien report, there could be a small fee.
- Pros: Free or low-cost, and you can do it yourself.
- Cons: It might take some time and effort to operate the system.
Hire a Title Search Company
If you want to save time and get a thorough search, a real estate title search company is a great option. These companies dig into the property’s ownership history and can uncover liens, even ones tied to past owners.
- Why It’s Useful: Knowing about old liens can save you from future issues when selling your home.
- Cost: Fees typically range from $75 to $200, depending on your area.
- Pros: Comprehensive and hassle-free.
- Cons: It’s not free, and you’ll need to wait for the results
Use Online Tools
Websites like PropertyChecker.com or PropertyShark make it super easy to search for liens by entering the property’s address. It’s fast, and you can get a report in minutes.
- Cost: Some websites offer one free search, but additional reports might cost a few dollars.
- Pros: Convenient and quick.
- Cons: You might not get as much detail as with a title search.
Common Types of Liens to Look For
Check liens on property to avoid surprises during transactions. Here are the most common types of liens:
1. Judgment Lien
A court imposes this lien when someone fails to pay a certain debt. There are two types: voluntary, where the homeowner agrees to use the property as security, and involuntary, where the court places a lien on the property without the homeowner’s consent. There are no specific restrictions on what property a judgment lien can apply to—it can be placed on any asset owned by the debtor.
2. Attachment Lien
This is an involuntary lien placed on a property to stop the owner from selling it while a legal case is ongoing. For example, attachment liens are often used during divorce or bankruptcy proceedings. They can apply to a specific property or all of the owner’s assets.
3. Estate Tax Lien
The government can place an involuntary general lien on property to ensure estate taxes are paid when due. This occurs when property is inherited and the estate taxes are not paid. The lien guarantees that the government will receive payment before the property is sold or passed on to the next generation.
4. Corporate Franchise Tax Lien
Business owners in the states that have corporate franchise taxes have to pay this tax to conduct business. If the tax is not paid, the state can lay a general and involuntary lien on the properties or assets of the business to get the unpaid amount.
5. Federal Tax Lien
If someone doesn’t pay their income taxes, the federal government can place a general, involuntary lien on their property. This tax lien applies to all assets owned by the individual, ensuring the government gets priority payment.
6. Mechanic’s Lien
If the homeowner does not pay for the improvements or the materials and another person repairs, contractors or the supplier can record a specific lien against the property without the homeowner’s consent. Even if the homeowner paid the contractor, they can be served with a lien if the payment is not made to the workers or suppliers.
7. Vendor’s Lien
This lien allows a seller to repossess the property if the buyer doesn’t make all payments. It’s a specific, involuntary lien that often applies in cases where the seller financed the property for a buyer who couldn’t qualify for a traditional mortgage.
8. Vendee’s Lien
This lien can be used by buyers in case a real estate developer fails to deliver a particular project that a buyer has acquired. It is a particular, involuntary encumbrance on the development to ensure that the builder delivers and fulfills the obligations.
9. Bail Bond Lien
If the homeowners use property as collateral for the bail, an involuntary lien is placed on the property. If they do not show up to the court, the bail bondsman can seize the property and sell it to get their money back.
10. Municipal Utility Lien
If a homeowner fails to pay utilities such as water or electricity, the municipality can give a specific involuntary lien to the property. The lien will still be valid until the mentioned bills are paid.
Knowing how liens interact is just as important as understanding their types. Liens follow a “first in time, first in right” rule—meaning the first recorded lien takes priority. For example, a mortgage is recorded before a judgment lien gets settled first. This order affects how debts are cleared in transactions and ensures a smooth process.
Understanding lien priority helps you handle property dealings confidently and avoid complications.
Steps to Clear a Lien from Property
Before selling your home or refinancing it, the lien has to be cleared. Getting through the process can be complicated at times, but follow these easy steps to eliminate the lien to ensure the property can be sold or transferred without any issue.
- Settle the Debt: The easiest way of eliminating a lien is by settling what you owe. Determine the validity of the lien and pay off the entire amount or negotiate a settlement price with the creditor.
- Get a Release Document: After settling the debt, ask your creditor for a release-of-lien form. This paper acts as proof that removal has taken place. The creator will record it with the county recorder’s office, and you will receive your own copy.
- Let the Time Run Out: There are cases where liens expire after some time. For example, in Michigan, judgment liens usually last up to five years at maximum. Although within that period such a lien may not encumber the property any longer, remember the debt still exists independent of it, and thus it should be taken care of separately.
- Work Out a Deal with the Creditor: You can try negotiating with the creditor to resolve the lien for less than the full amount owed. This can be done informally or through mediation or arbitration, making it an efficient way to settle without paying the total debt.
- Explore Bankruptcy Options: When you file for bankruptcy, it can release you from some secured debts like mortgages. However, this doesn’t remove a lien automatically from your property. For your understanding of rights and options, talk to a bankruptcy attorney about it.
- Challenge the Lien in Court: If you feel that the lien was filed based on fraud or any other unjust reason, then there are legal remedies for expunging it from records. A case like this requires clear evidence showing why such a claim can be invalid, and if such evidence is found competent enough by the judge, then they will pass an order allowing you to have the lien officially removed from your property.
Clearing a lien may take time and effort, but resolving it ensures your property is free of complications. Taking the time to check liens on property can help you identify potential issues early, making the property lien release process smoother and allowing you to move forward confidently with your transactions.
Preventing Liens on Your Property
It is possible to remove a lien, but it is much easier to avoid one in the first place. Regularly check liens on property and stay proactive with preventive steps to protect your property and avoid the hassle of dealing with liens in the future.
So what can you do?
- Hire Reliable Contractors: Get a licensed contractor with a good record of payment to avoid falling prey to contractors who place liens.
- Understand Your Contracts: This is particularly important in construction or remodeling contracts to check for payment provisions and lien release provisions.
- Request Lien Waivers: Before making payments, ensure that contractors and suppliers give you lien waivers to show that they won’t place a lien after being paid.
- Track Subcontractor Payments: It is crucial not to let contractors delay payment to workers and suppliers so that unpaid parties do not file liens.
- Stay Current on Bills: Ensure you pay your property taxes, utilities, and other debts in order to avoid government or municipal liens.
- Get Title Insurance: Title insurance will shield you from any undetermined claims or encumbrances that may appear once you have purchased the property.
- Monitor Property Records: It is wise to check on the public records now and then to find out if there are any liens filed against your property.
Final Thoughts!
It is very important to check liens on property to avoid unexpected complications in real estate transactions. While this guide covers the key steps and methods for identifying and resolving liens, it’s equally important to consider broader aspects, such as staying informed about state-specific lien laws, emerging technologies like blockchain for lien tracking, and the hidden costs associated with unresolved liens.
That’s why Hall’s IRS is here—to ensure no detail is overlooked. We provide the expertise you need to address every aspect with ease. With our focused support, you can move forward confidently, knowing your property matters are in capable hands.
FAQ's
An unpaid lien can appear on your credit report and will be listed for up to 10 years from the time the lien was filed. It can still be on your credit report for up to seven years, even after you have cleared it off.
Hall’s IRS is here to help you address and resolve liens effectively, ensuring that the process is handled properly and minimizing the impact on your financial record.
Yes, you can buy a house with a lien on it, but the lien must be resolved before the property can legally change ownership. This usually means the seller needs to pay off the lien at closing. If the lien isn’t cleared, you could risk inheriting the debt associated with it, which might complicate the purchase process.
You can reach out to us at Hall’s IRS. We will check liens on property and make sure that all the liens are addressed in the due diligence phase itself so that no unexpected legal complication may come across during your property purchase process.
Yes, most of the liens are public records. They are often recorded at the county recorder’s office or another comparable county office, so they become accessible to the public. Secured interests require the creditors to record their interest in a property to make potential buyers, other lenders, and anyone who is interested aware of any existing claims on the property. However, there are private connection liens that may not be recorded in public, such as personal agreement liens.
Hall’s IRS can assist in verifying the status of the liens and avoid being shocked by the outcome of a property transaction.
The cost of a lien search typically ranges from $50 to $150, depending on the property’s location and complexity.
At Hall’s IRS, we understand how important it is to manage these costs while ensuring accuracy. That’s why we offer thorough and reliable lien search services, making sure no details are missed.
The answer is yes; a property can possess many liens outside of mortgages. Home equity loans, lines of credit, tax liens, or court judgments can also become the subject of liens. A lien is a legal title or claim against the property and its value. They coexist with any existing mortgages.
It is necessary to know the implications that result from multiple liens because this mostly affects the real financial status and makes it difficult for future access to credit. Hall’s IRS can help you check liens on property and address these liens, ensuring you understand the potential risks and take the right steps to resolve them.
