How to Find Out if a Property Has a Lien on It

A lien is an obligation to pay a debt. Liens may be voluntary or involuntary. Typical types of liens are bank loans for autos and mortgages for homes. These liens encumber the property, so the owner cannot sell it unless the lien or loan is settled and removed.

Investigating a home's title for liens against the property is crucial before purchasing. This title research is standard when buying a home but may not be required in every state. Generally, a lien prevents the sale of a home while it is on the title. Not knowing about a lien could complicate a planned purchase while the owner settles it. There are free property lien search engines that will reveal any issues.

A perfect title is a term for a clean, unencumbered title. A title cannot be perfected until a thorough property lien search is concluded. Only specific property records will reveal liens.

What is a Property Lien?

Some states limit property liens to those directly related to the home's value, while others may allow liens on property titles for different reasons. Liens must meet legal requirements in the state where the property is located before being recorded on titles. The new owner assumes responsibility for the debt if a lien is not found when a home is sold. If the new owner has title insurance, they may be able to avoid paying the previous owner's debt.

Types of Property Liens

There are two types of liens: voluntary and involuntary. A voluntary lien is a type of lien the owner of the property must agree to, such as mechanics liens for upgrades to the property. On the other hand, an involuntary lien is placed on the property’s title without the owner's consent or willingness. These liens limit the owner's ability to refinance or sell the property until the required amount is paid.

• Mechanics' liens are for work on the property. This can include a new roof, windows, or driveway. When applied voluntarily, these liens are removed when the work is complete, and payment is made in full. Still, they can be overlooked, remaining on the title indefinitely. At other times a mechanics' lien is placed when the homeowner fails to pay for home improvements. Some states have statutes of limitations for these liens, allowing them to lapse automatically after 20 years.
• Tax liens encumber the sale of a property until taxes are paid. These liens are placed by federal, state, or local officials and do not have a statute of limitations. They remain on a title indefinitely. These can be the worst kind of lien because, under extreme circumstances, the property could be seized by the government and sold to pay the debt. While this is unusual, it is possible through legal channels.
• Judgment liens are court-ordered payments that cannot be collected immediately, so they are recorded on the title of the person's property to ensure eventual payment. These are the result of lawsuits. Such a lien on the property title ensures that the lien will be collected before the property changes hands. Judgment liens can result from any debt, from civil penalties incurred by losing a lawsuit to restitution for a crime that a judge orders.

How Do You Check for Liens on a Property?

The two records that follow a property through time are the deed and the title. Holding the title, even when a bank has a mortgage on the property, allows the owner to control the property, make changes, and sell the property. However, when a lien is on the title, the owner may not refinance or sell the property.

Before buying a property, it's essential to check for liens on the property by researching the title at the local land office or registry of deeds. A title search, usually done as part of a purchase and sale by a title company, ensures the title is free of liens and other encumbrances. Land offices are found in every jurisdiction that assesses property taxes.

The county registry of deeds is a place to start a title search. In addition, the local assessor's office, located in the town or city where the property is located, should have information about the property and any liens attached. Suppose an issue is found while researching here. In that case, it is essential to follow through at other offices, such as the registry of deeds, to ensure that nothing poses a problem. Where you find one issue or lien on a title, there may be more.

Other issues that may be found when doing title research include unknown easements that allow others to use portions of the property and restrictive covenants. Covenants are things like homeowners’ associations, which require dues to maintain common areas and may impose restrictions on property appearance. Homeowners’ associations can also place liens on properties for unpaid fees or fines.

Online search tools may be of assistance in narrowing the search for the property's title. Many cities, towns, and counties have digitized records, making it possible to search for property titles online by the owner's name or address.

Is It Possible to Buy a Property that Has a Lien On it?

It should not be possible to buy a property with a lien. Due diligence in title searches required by mortgage companies should uncover any irregularities or encumbrances on the property. Most liens must be cleared before a property can change hands. It is common practice for purchasers to get title insurance that will protect them from unforeseen liens.

Is it Good to Buy a Property with a Lien on it?

If a property is purchased with a lien, the new owner may be legally compelled to assume responsibility for paying the lien. Unless a property is significantly below market value, it is unlikely that assuming someone else's debt is a good idea.

Conclusion

The best way to purchase property is with full disclosure of all potential issues. At the same time, it's important to trust but verify; longtime homeowners may forget about or be unaware of liens. A thorough property record search, explicitly looking for property liens, is crucial for purchase and sale.