Imagine finding the perfect buyer for your home. The paperwork is being drawn up, you’ve started packing, a property lien search is being done, and the closing date is coming up quickly. Right before closing, you get a call. There’s a lien on your home. The buyer isn’t sure he wants to buy your house now, and you’re left trying to figure out what happened and having to find a new buyer.
Buying or selling a home with a property lien can bring the transaction to a halt. It leaves everyone scrambling to find out what to do next.
By conducting a property title search before you sell your house, you can avoid these unpleasant surprises or create a plan to take care of any liens on your property. Here’s what you need to know about a lien search.
What Is a Property Lien?
A lien is a legal claim put on a property showing that a third party — usually a creditor, business, or government agency — has a financial claim on the home because of an unpaid debt. This is done in an attempt to collect on a debt. Normally, these liens are involuntary liens, meaning the homeowner didn’t agree to the lien on the house.
These liens become an issue when the homeowner is trying to sell their house. Often, the lien will need to be paid off or settled before a lender will be willing to lend money to a buyer to purchase the home.
There are four categories of involuntary liens that you will need to look for during your property lien search. They are:
Child Support Liens
This lien can be placed on your property when court-ordered child support has gone unpaid and other avenues of collecting the back-due support have not successfully worked.
Many homeowners face this type of lien when they have unpaid credit card or medical bills. When you owe money to a creditor, they can get a court judgment against you, which places a lien on your home for the amount of money you owe.
Mechanic’s or Contractor’s Liens
Similar to a Judgement Lien, this lien can be placed on your home if you haven’t paid for services rendered.
If you owe the local, state, or federal government back taxes, they can also put a lien on your home to try and get the money they are owed.
Regardless of which type of lien is put on a home, these liens will show up when you do a search of the property.
How to Search for a Lien on a Property
Searching for a property lien sounds tedious and complicated, but in reality, it’s a fairly easy process. There are a few different steps to follow when searching for a title lien. The first thing you’ll need to do is find out who owns the property. If you’re the homeowner searching your own property, this is easy enough. Still, you may have to visit the tax assessor’s office if you do not know your parcel number.
If you are buying the home, you may have to contact your realtor or do an internet search to get the homeowner’s information. Once you have the owner’s name and information, you will be able to start searching for lien data on a property, either online, in person, or with help from a third party.
Online Property Lien Searches
Many public records are now online, making it easy to search from the comfort of your home. See if your tax assessor and county clerk have online databases. If they do, you will be able to search these records for tax and property information.
Another great option is to do a public record or civil record search. Many counties and states have made this information available online now, although platforms from some jurisdictions are more user-friendly than others. Once you have the parcel number and homeowner’s name from the tax assessor’s office, doing this search online becomes a breeze.
Sites like BeenVerified will do searches for a small fee if you have the property address and owner’s name. Some online third-party companies will also do the property lien searches for you. You can give them the information from the tax assessor and let them do the search for a fee. But be careful with these online sites as they are not all the same, and some of them have been known to provide incorrect information.
In-Person Property Lien Searches
If you’ve tried all the online avenues and still couldn’t find the records you’re looking for at the tax assessor’s office, you may have to head to the county clerk’s office.
At the county clerk’s office, you or the clerk can sift through all the public records for any liens on the property. The clerk will be available to answer any questions you may have, and they can help you identify any possible issues with the property. And though their advice is not official legal advice and cannot be used as such, it can point you in the right direction.
Unfortunately, in-person searches can only be performed while the offices are open, so check the county clerk’s office hours in the jurisdiction of the property you are searching for before paying them a visit.
Third-Party Property Lien Searches
If you’re short on time, can’t find the information on your own, or have no interest in doing the legwork yourself, you can hire a title company or title abstractor to do the property lien searches for you. The benefit of this is their years of experience. They know where to look, what to look for, and what information poses a problem when closing time comes. They understand the records they are searching for and don’t have to guess what is being said in the documents. If you are unfamiliar with legal documents, some of these can be difficult to understand.
Once a title company finds all the information on the property, they will put together a report, which often includes a history of ownership of the property, liens on the property, and other property records. While it may cost you some money upfront to have the title company do the work, having it done for you can save the time and headache of doing the research yourself. If you are looking to sell your property, it also saves any aggravation at closing time for something that may have been missed.
A title company will almost always perform a title search when a buyer puts in an offer on a house. It’s a requirement if you are financing the purchase, as it protects lenders from outstanding debt from past homeowners. Liens will be discovered during this process, but by then it may be too late. Buyers will often back out of the sale if the lien cannot be paid off quickly. The buyer will not want to assume this debt and will find another home to buy.
Removing the Lien from Your Home
If you’re the homeowner, you must settle the debt or dispute it in order to have the lien removed from the home. Doing a property title search before selling your home is a sure way to eliminate any hassles that may arise from a property lien. You will be aware ahead of time and can formulate a plan to pay off the debt.
If you have enough equity in the house, you can use the proceeds from the sale to pay off the debt. This will also remove the lien. In some cases, you may need to apply for a lien release so the record can be removed from the clerk’s office. The IRS will release the lien within 30 days of it being paid in full.
Property liens are one of the most significant legal details to overcome when buying or selling your home. For a seller, it’s a hurdle to overcome before the title can be “cleared” for sale. For a buyer, it’s best not to get caught up in someone else’s debt. If there is an unresolved lien on the home, you as the buyer could inherit that lien.
To find out more about liens and other factors that can affect the buying or selling a home, reach out to a realtor. While they do not perform the searches themselves, they can help you through the process of buying or selling a home. They can fill in the details and help you get the best deal possible.