Last updated 10/29/2019
For many people, their house is one of the largest single investments they will ever make. Because of the scale of personal investment involved, any issues regarding the financial aspect of homeownership can unnerve homeowners, especially an issue as potentially restrictive as a lien.
Discovering a lien on your property can come as a shock. A lien can limit your options, so it is valuable to take the time to understand what liens are, how they function, and what options you have to resolve any issues that arise as a result.
If someone is unable to pay their debts, the creditor, i.e., the person the debtor needs to pay, may be able to collect funds from the debtor by claiming a share of something of value that the debtor owns. That claim on the debtor's property is known as a lien. Once a lien is placed on a debtor's property, the creditor will get a portion of the funds if the property is sold.
Liens can be placed on all kinds of property, but they are usually placed on the most valuable items a debtor owns, like their home, vehicles, boats, etc., because these types of properties will usually cover or significantly contribute to the amount owed.
Once it has been established, a lien limits the property owner's ability to transfer ownership of the property's title; the lien must be satisfied before the property on which the lien is placed is sold. Additionally, there are different types of liens. Some of the more common types of liens include:
Just as there are many types of liens, there are many types of people and institutions that can put a lien on your property. When talking about who can put a lien on your property, it is worth being aware of both voluntary and involuntary liens.
If you have taken out a mortgage, the creditor may have put a lien on your house as collateral. This mortgage lien is a voluntary lien into which the debtor has knowingly entered.
If you have failed to pay for work you have had done on your property, the contractor you hired could possibly put a lien on your property to pay for their labor and materials. If you have not paid taxes, the government may put on lien on your property to cover those unpaid taxes. These are both examples of involuntary liens.
Generally, a title search will determine whether a property has a lien on it. It is uncommon for people to purchase property with a lien on it because property usually cannot be sold until any liens are satisfied. However, liens in the name of previous owners can sometimes go unnoticed in a deed.
These types of situations become complicated quickly and trying to navigate this type of legal territory alone can be a challenge. If you are having issues with liens on your property, a legal professional with experience in these types of issues is a valuable resource and may make all the difference.