When it’s time to place your home on the market, you’ll want everything to be in order. It’s likely that you’ll work with a real estate broker in order to ensure that your house is seen by enough people. You may work out some repairs or updates in order to ensure that it appeals to buyers as effectively as possible. You may even want to advertise your house online to better market it to a broad range of buyers. But that can all come to a screeching halt after you find out that there is a lien or other violation that has been placed against your home.
In the simplest terms, a lien is a claim held by a third-party against your property, and though you would think that all homeowners would be aware of liens placed against their properties, this is not always the case. Unrecorded liens do exist, and any kind of lien can put a serious wrench in your plans to sell your house.
How Do Liens Work?
Whether they are recorded liens or unrecorded liens, liens are usually held by creditors against homeowners. They’re a way for the creditors to collect what is owed to them, usually because they have not been efficiently or properly paid. If a lien is placed against a property, the homeowner no longer owns that property free and clear. However, a lien can be removed.
When a lien is placed against a property, it limits what the owner can do with the property. This means that the owner usually is not able to sell their property until the lien is removed. Involuntary liens are particularly difficult to have removed. If a debtor refuses to fulfill their financial obligations, in some cases the creditor may be owed a part of the property, or a part of the proceeds if the property is sold.
What Is an Unrecorded Lien?
Unrecorded liens can be particularly complex for homeowners to deal with. Essentially, these types of liens are involuntary debts and do not show up on the public record. This can make municipal lien searches particularly difficult, which is why a lot of people turn to professional property lien search companies to find unrecorded liens, while recorded liens may be somewhat easier to find independently.
There is a difference between voluntary and involuntary liens. If you ask to have an advance on your mortgage, your bank will take out a lien against your property. You agreed to this, and therefore it is a voluntary lien and something that you should be aware of from the start. If a creditor seeks legal recourse against you by filing for a lien, this is an involuntary lien. This will usually happen because you defaulted on a loan or failed to pay some other kind of financial obligation. Technically, a lien could be filed by a contractor, a government agency, or virtually any other kind of creditor.
How Can I Have a Lien Removed?
If you were genuinely unaware of any unrecorded liens filed against your property, finding out about them can be quite shocking. But there are steps that you can take to ensure that your lien is removed. The most obvious way to do so is to pay off your debt. When you pay off your debt, you’re removing the reason for the lien to be placed. If you’re unable to pay off the full debt in a timely manner, you can reach out to your creditors to see if there is an option available for you to pay less and have the lien removed.
If you feel your lien was placed unfairly, you can also seek a court order to remove the lien. You need to have proof that the lien is not valid or that the lien expired. Furthermore, if you bought title insurance when you purchased your property, you can seek their help if the lien is invalid. If the lien is invalid, you could have a claim to raise with them.
Liens certainly aren’t fun to deal with, but they aren’t the end of the world. As soon as you find out about yours start taking steps to pay off your debts or have the lien removed.