What is a lien?
A lien is a legal claim against real property by a creditor of the property owner, recorded in the county clerk’s oﬃce. The lien remains on the property until the property owner pays off the debt. An unpaid lien can lead to the legal right to seize and sell your real estate to satisfy the judgment or debt.
Who can put a lien on my home?
Liens can be consensual, statutory or pursuant to a judgment. Your home mortgage is a consensual lien and usually takes priority over any other debts. Notice requirements vary and are dependent on the type of lien. Some common examples of liens:
- A licensed contractor can place a mechanics lien on your property for unpaid construction work.
- The IRS or State can place a lien on property for unpaid income taxes. The county can place a lien for unpaid real estate taxes.
- Any creditor who obtains a judgment can place a lien on real estate.
- The Human Resources Administration or the Department of Social Services can place a Medicaid lien on a home for the cost of long term care
How do I find out if there are any liens of record against my name or the property?
A title search will turn up any liens on the property and the owner. Anyone can check with the clerk’s office in the county where the property is located for judgments, liens, or lis pendens. If you are planning on selling your home, you should know whether there are liens on the property before starting the process.
If there are liens of records, what do I have to do?
If liens are discovered, the next thing to do is contact each judgment holder/creditor and settle the outstanding debt. Occasionally the judgment holder might be willing to negotiate a smaller sum in full satisfaction of the debt. Once paid, the judgment holder or creditor issues a Release of Lien or Satisfaction. It is crucial that the release is recorded at the county clerk and a copy given to you for record-keeping. Without the Release of Lien or Satisfaction, paying the debt in full alone does not automatically erase the lien from the record.
I know there are liens recorded against my home, can I still sell?
Yes, you can still sell your home if there are liens against it. A mortgage is a common lien that is normally paid off at the closing. You are required to pay off any open liens from your personal funds or at the Closing out of sale proceeds. Sometimes it is possible to find a cash buyer who is willing to pay the liens oﬀ on your behalf above the agreed upon sale’s price.
What if I have a cash buyer who wants to take title to my home with the liens?
If a buyer is considering purchasing the property with open liens, they would order a lien and judgment search to determine the exact amount. This often leads to negotiation in the purchase price. The liens would still have to be paid at the closing and all necessary payoﬀ letters obtained from lien and judgment holders. An experienced real estate attorney can advise you on the most effective way to sell property with open liens.