What A Property Lien Is And What It Means To Your Home Sale

A property lien can throw a wrench in the works

Selling your home is a time of transition, new beginnings and change. With so many details to consider, you may not think about how a property lien can impact your home’s sale, or even stop the sale in its tracks.

What is a property lien

If you have unpaid debts, a creditor can put a lien on your home. A lien will appear on your credit report. It can damage your credit score and block you from financing a new home.

There are several types of property liens

The most common types of liens are:

• Tax Liens – The county government places a tax lien on your property at the start of each tax year. When you pay your property tax, the government removes the tax lien. If you do not pay the tax lien,  it shows up on your credit report. The government can also sell your house to collect the payment.

• Mechanic’s Liens – If you do not pay someone who contributed to making improvements to your home or property, they can put a lien on your property. Builders, contractors, suppliers, engineers, surveyors and architects can place this type of lien on your property. If you do not make a payment, a court could put your home in foreclosure.

• Mortgage Liens – Mortgages and home equity loans are voluntary liens where the lender uses your home as security for the loan. If you do not pay the loan, the lender has the right to put your home in foreclosure, and sell it, to get their money back.

• Judgment Liens – If you are responsible for paying monetary damages from a lawsuit, the court can place a judgment lien on your home until you pay off the judgment. Also, if you sell your home and the proceeds are not enough to pay off the mortgage balance, the lender can petition the court for a judgment lien for the balance owed.

Other types of property liens

Other types of liens that can be placed on your property include Divorce Liens, Uniform Commercial Code 1 Liens, IRS Liens, Homeowner’s Association Liens and Credit Liens.

What to do if you discover a property lien

If you’re selling your home and discover a property lien on your home, then you must resolve it as soon as possible. Talk to your real estate agent and title company to find out if the property lien is your responsibility. If the lien is verified as your responsibility, make payment arrangements with the creditor. In some cases, you can use the proceeds from the sale of your home to pay off the lien. If a lien is not your responsibility and it’s preventing you from selling your home, seek legal advice about how to resolve the issue.

Are you considering selling your home?

Let’s talk about your best options for selling your home. Contact me today at 408-472-0817, or click the image below.

California Realtor, Stephen Theard

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