In order to list a property for sale it is important to verify if there is a lien on the property. Most buyers will perform a title search to make sure that the house does not have any unexpected claims against it. In all cases, it is best to know how to determine if there is a lien on a property.
This is a process that is not exclusively for sales but can also apply to transferring property to a family member. In this way, you will avoid inheriting a complicated situation, so it is always important to make sure that you do not have unknown encumbrances.
What is a lien on a property?
Liens on property are legal claims that another person or company has on your real estate. Due to these liens, you are prevented from realizing all of the proceeds when the property is sold. This is because the lienholder will be entitled to the money before the owner.
Even the creditor can force the sale, with the purpose of recovering what is owed to them. For this reason, liens on property can lead to foreclosure.
How do I check if there are liens on my property?
There are different ways to search for liens on a house or any type of real estate property. It all depends on whether you are looking for a specific lien or if you want to discover all possible liens:
Search local government records
Either the recorder, assessor, or the local court in your county can help verify if there are liens on the property. Typically, in each county, you will be able to access the records online for a fee, you can send an email or do the search in person.
However, for these searches, the ideal is to know what you are looking for and to have enough time to do it.
Check credit reports
Liens can be reported to credit bureaus and may appear on credit reports. This is a free alternative to check if there are any liens on a property. However, the lien may not appear on this report because it is not handled the same way in all cases.
Using a title search company
This is the most expensive method to find the different encumbrances you may have on a property. It is the most complete and it allows you to verify all types of liens you may have, and does not require a lot of time, because the company will take care of the whole process.
Types of encumbrances that a property may have
If you owe money or do not pay what is legally owed, you may have the following types of liens:
- Mortgage or Deed of Trust: This applies when a loan secured by the home has been made. It could have been to purchase the home, refinance it, or access home equity.
- Property tax: Imposed by the local property tax authority if taxes are not paid.
- Federal taxes: If you have tax delinquencies with the IRS, this lien will be imposed.
- State taxes: Apply when money is owed to your state government.
- Medicaid: Can be applied to a deceased person’s estate to recover the cost of medical care that was paid for.
- Judgment: May end in a lien for loss of a claim, including failure to pay employees or keep assets that were to be given to an ex-spouse in the divorce.
- Child support: Filed if wage garnishment or forfeiture of tax refunds is not sufficient.
- Contractor: This may apply if the roofer, electrician, or other professional performing work on the property is not paid.
- HOA: Failure to pay homeowner’s association dues could result in a lien being placed on the property.
Normally, the people who hold the lien are the ones who have priority if a sale, refinance, or foreclosure takes place.
What to do if I have a lien on the property?
The ideal scenario is one where you get rid of the lien as soon as possible to avoid foreclosure. To do so, you have different options:
- Pay off the debt in full.
- Go to court and have a judge declare the lien invalid.
- Demonstrate that payment has been made if it has not been updated in the system.
- File a title insurance claim.
- Wait until they expire, especially when the creditor does not renew them.
It should be noted that some liens can trigger foreclosure if obligations are not met. In addition, there are some that may remain indefinitely, and the estate may have to pay them once the owner dies.
For this reason, it is ideal to settle debts, because if you have a lien on a property that you are going to sell or inherit you will have a problem with the creditors of the debts.
- Sicherman, D. (n.d.). How do I find tax liens on a property in Florida? | Easy title Search. https://easytitlesearch.com/articles/how-do-i-find-tax-liens-on-a-property-in-florida/
- Fontinelle, A. (2023, July 27). How To Check For Liens On Your Property. Forbes Advisor. https://www.forbes.com/advisor/mortgages/check-liens-on-property/