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How to Find out If There Is a Lien on a Property

Are There Liens on a Property? Here’s How to Check And What it Really Means

By | 2020-01-28T12:40:07+00:00 January 28th, 2020|Hard Money Blogs|Comments Off on Are There Liens on a Property? Here’s How to Check And What it Really Means

In this article we will discuss how to find out if there is a lien on a property. For many of us, finding a dream house or investment property is a simple process. Yet, for some people, discovering that their intended property has a lien attached to it, the process becomes a little more complex.

Undoubtedly, one of the better ways for creditors to collect what they’re owed, a lien on a property isn’t so good for potential buyers.

The most important thing here is to find out the property you’re interested in is clear of liens before you make your offer.

Here we provide further guidance on the subject of liens. Offering tips, we look at ways you can discover any potential lien on property you may be considering.

how to find out if there is a lien on a property

What Is a Lien?

A lien refers to the security interest type that has been granted on the property. This ensures secure payment of a debt or other type of obligation.

There are two parties involved in the lien. These are the lienee and the lienor.

  • The Lienee – The person guaranteeing the lien and the owner of the property
  • The Lienor – The person who receives the lien benefit (also referred to as the lien holder)

Though they may sound a little complicated, liens on a property are simple concepts. They merely assure a creditor that they can claim on your house should you owe them money. So, if you don’t pay up – they are entitled to receive your home as payment. Though this may sound intense, liens are a common way for creditors to collect what they’re owed.

How Liens Affect Property

When selling property or even refinancing it, you will have to have a clear title. Therefore, before you put anything into motion regarding a property, you must ensure its liens are paid off.

For those looking to buy, there are two steps involved here.

Firstly, you’ll need to undertake your own search to discover whether your intended property has a lien on it. Then the next stage will involve you deciding whether you want to continue to make an offer on the property or hold off.

Though some people prefer to walk away here, it is possible to continue to purchase a property with a lien on it. This will require a little more effort and paperwork at your end, though. However, if you have your heart set on a property, there are ways around this.

Understanding the Two Types of Property Liens

There are two kinds of liens that can be placed against a property. These include:

A Voluntary Lien – Like that of a mortgage, a voluntary lien is one that the homeowner agrees to.

This usually involves a contract being written up to officially place the lien on the property.

A voluntary lien will not negatively affect the property. This means no effect to its title or on the ability of the homeowner to convey title.

An Involuntary Lien – These are the more difficult to discharge from a public record.

Involuntary liens usually occur through unpaid obligations. This tends to include tax bills or home improvement invoices.

Unfortunately, this is the lien that will affect the ability to sell a property with ease.

How to Discover If There’s a Lien on a Property

First things first, before you make any type of a financial decision, there are several options to take when looking for liens on a property.

The best thing here is that liens become a matter of public record once they’re recorded. This greatly helps you in your investigation.

  1. Complete an online country office search – All you need here is the property owner’s name or the address.
  2. If your county office has no such online service, visit the office in person. Some people prefer to do this even when the service is available online. Most people that work in such offices are a valuable source of help in such matters.
  3. Get in touch with a title company. Once again, with some extremely knowledgeable workers, title companies can instantly track a lien on a property.

The Importance of Making Liens a Standard Part of Your Property Search

Not all sellers will openly tell you of any lien of their property! Though, this is, in some ways understandable, especially for a quick sale. But, it’s still worth performing your own search before continuing with a purchase.

Because it’s so quick and simple to search for property liens, the added peace of mind is well worth the process.

Thus, if you do discover a lien, you can then prepare your next move.

What to Do If Your Property Does Have a Lien on It

For some people, the fact that their intended property has a lien halts them in their tracks. However, for those that are mentally too invested in that property, some are willing to take on such additions.

Though it may well take a little more time and effort to remove the lien, it is, of course, possible to purchase a property with a lien attached:

Step one: Determine the figure of the lien

Before you do anything else, discover the actual price of the lien. Once you know this amount, you’re in a better place to decide on whether you want to move forward with the property. You may well even find it’s a relatively small cost to close on the property for.

Step Two: Devise a payment strategy

Once this figure is known, you’re in a position now to discuss how the lien will be paid off.

This is, in fact, crucial here as without this being paid off, the property can’t be sold or refinanced, as per local government ruling.

However, the seller can partner with their creditors and negotiate a settlement here.

Take Care When Considering Property with a Lien on It

In conclusion, when looking to purchase property, discovering it has a lien on it can throw some people off course. However, it’s not impossible to work past the problem.

Though it may take a little longer to get through, as opposed to purchasing property without it, it is, in fact, doable.

For best practice, enlist the help of a knowledgeable realtor who can help you navigate this process. That way, whatever decision you make, it won’t cost you anymore financially.

About the Author:

Yanni Raz is The Founder and CEO of HML Investments, with over 15 years in the real estate and hard money lending industry, Yanni is an expert in real estate investing, trust deed investments and more.