What to Know About Property Lien Searches
Do you want to do a property lien search? Are you interested in how to find out if there is a lien on a home? Knowing how to check for liens on a house is essential.
If you are looking to buy a new property, you need to be sure that there aren’t any legal problems with the purchase.
Knowing how to search property liens becomes crucial when you are buying a troubled home.
You don’t want to discover that there are debts against a property suddenly. This could leave you with an expensive bill to pay or legal issues, which will take time and money to resolve.
Whether you are buying or selling a home, nobody wants to go through the aggravation of dealing with a property lien.
These types of liens almost always take time and money to solve. Typically, they will involve hiring a real estate attorney to get them released for a transaction to take place. Is it possible to do a free property lien search? Sure, but I wouldn’t advise it.
So while you may have put down a significant down payment, before you proceed to the closing, most of the time, any outstanding liens will need to be cleared.
So don’t get those moving boxes together just yet. Let’s explore what you need to know if you encounter a lien on the house you’re dying to purchase.
What is a Property Lien?
When the property owner has failed to pay a debt, a legal claim can be filed against the home. This gives the creditors a way to recover the money owed to them.
A common type of lien is a mortgage, which the homeowner takes out voluntarily. Unpaid bills can lead to an involuntary lien. The voluntary lien or mortgage isn’t ordinarily going to cause problems and won’t change the ability to transfer the title to a new owner. An involuntary lien could be an issue, however.
If a creditor has a claim on some of the home’s value, it could prevent the sale from happening as easily as normal. You may also find that the lien will be difficult to remove from the public record.
So, it is essential to understand there are two types of liens, voluntary and involuntary.
Some example of involuntary loans include the following:
- Unpaid real estate taxes
- An unpaid IRS tax bill, which is an income tax lien.
- A mechanics liens, which is when you don’t pay someone who has done work to your home.
- A judgment lien in which a creditor is owed money.
- A divorce lien where the spouse is stopping a property sale.
All of these types of liens will impact either your ability to buy or sell a property. A homeowner will need to negotiate their removal or release in order to move forward with a real estate transaction.
A property lien search will be critical in order to find out if there are hidden problems with a particular house.
Checking for a Property Lien
Finding out if there is a lien on a property is pretty straightforward. A lien has to be officially documented in public records. You have a few options to do a lien search for these records, both online and in person.
The easiest way is to do a lien search is in real estate public records online. You can search in the assessor’s records or county register of deeds for the property you are interested in buying. Only the current owner’s name and address are necessary to find out if there is any information online.
It’s also an option to pay a visit to the local assessor’s office. This will allow you to ask for help from the staff if you need assistance with your search. This is the best way to do a free lien search on a property.
Help from a local title company will uncover any liens on the property, as well. They can also be helpful in other ways when purchasing a home. Checking for liens on a property is one of the things that a title company does.
However, when you are not doing the lien search yourself, the most common way will be from the attorney representing the bank. Whenever a mortgage is being given on any property, there is what’s called a title search done. The purpose of doing a title search is to make sure there are no blemishes on the title. A property lien would be considered one type of unclear title.
A lender is almost assuredly not going to provide financing for a home with a lien placed against it.
Types of Property Liens Video
The video explains three types of broad liens that can be placed on a house, including a consensual lien, statutory lien, and judgment lien. It is worth spending two and a half minutes reviewing the information.
Removing a Lien
What will happen if there is a lien found in the records? If it is a voluntary or consensual lien, commonly a mortgage, this will be dealt with during the closing process during the transaction. The mortgage lien should be released at that point.
For involuntary liens, it depends on whether the debt has been repaid. If the lien has been satisfied, it should be removed shortly after closing. However, there can be some complications with this type of lien depending on who they are issued by.
If they have been created by a government agency, like the IRS, you should receive a notification that the lien has been released when the debt has been repaid.
If you hear nothing within a couple of months after the payment should have been made, you will need to contact them to find out what is happening.
Here is what you need to know about a federal tax lien, including instructions on how to get it removed by the IRS.
If the lien was on behalf of a business or other person, they might not realize that they need to release the property’s lien. This situation can be more difficult to resolve.
If you have taken responsibility for the lien, you may need to make the final payment contingent on the lien release being signed.
For the lien to be removed from the records, the county will need to be given a lien release that has been notarized. This will mean that a meeting at your bank could be necessary to pay funds and have the release notarized.
This may not be possible for larger businesses, though they are more likely to have a process for dealing with these situations.
Understanding how to remove a lien from a home with be paramount to having a successful closing.
Title Insurance Coverage
A lender who is giving you a mortgage will normally require that you pay title insurance to cover disputes. This could be useful if an undiscovered lien causes problems in the future. However, it will normally only protect the lender and not you. This kind of insurance is what’s referred to as a “lender’s title insurance policy.”
Extra insurance is available to buyers to provide the same protection offered to lenders. They call this an owner’s title insurance policy.
While there will have already been a search performed for a property lien, it is still possible that other liens could exist. There could also have been errors made when transferring the property and other problems like undisclosed heirs or even fraud.
Even if you do your best to find any problems in the house’s title, something could appear unexpectedly. The home seller may not even have known about a lien on the property, or perhaps they weren’t as honest as they should have been.
Either way, you could be in for a nasty surprise if a property lien suddenly appears on the title of your home. Whether lenders or owners, the title insurance policy is issued only after the title company has conducted a thorough title search.
Title insurance is not like most insurance policies. Most insurance policies are purchased to protect you against future issues. For example, you purchase car insurance to cover damages and losses in potential accidents. On the other hand, Title insurance protects you against past circumstances that have nothing to do with your purchase.
It should be noted that in some states, including Massachusetts, you can get homestead protection that protects the equity in your house against creditors, including liens they may place on your property. However, the homestead protection does not apply to debts that were acquired before the lien was placed. See the article for a full description of the coverage and exactly what the protection will do for you as a home buyer.When buying a home it is incredibly prudent to purchase your own title insurance policy!Click To Tweet
Final Thoughts on Checking For Property Liens
Whether you decide to search for properties liens yourself before entering into a contract or rely on the professionals during the transaction, understanding them is essential.
While you can do a free property lien search on your own, I would always advise you to rely on professional help when it comes to something as crucial as buying a home.
A property lien is not something that should be taken lightly. It is possible they could delay your sale and wreak havoc on your plans to close by a certain date. Make sure you understand all the ramifications of a property lien as part of your due diligence. Please consult with an attorney and use their expertise in this matter.
Hopefully, you have found this information useful in finding out if there is a lien on a house. Property lien searches can be done for free if you know what you’re doing. Otherwise, consult with a local real estate attorney who can conduct a property lien search for you.
Other Valuable Maximum Real Estate Exposure Media
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Use all of these additional resources to make the best decisions when buying or selling your next home.
About the author: The above Real Estate information about how to search for a property lien was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at email@example.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ years.
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