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

Whether you are in the market to buy a new house, or you are thinking about listing your own home for sale, you don’t want any surprises. Finding out if a property has a lien on it before the sales process gets started will save you a lot of headaches.

A lien is issued against a home title when a creditor has a financial stake in the property. This happens because of unpaid debt, which can be related to a mortgage, tax debt, unpaid contractor’s bills, and more.

Often, if a lien is found on a property during the buying process, the real estate deal falls through and the sale doesn’t happen. Most lenders will not approve a loan for a property that has a lien against its title. However, if you want to know how to secure a home loan when dealing with a tax lien, there are ways around the lien.

What are Property Liens?

When a creditor has legal claim to a financial stake in an asset, a lien is the process through which they publicly state their claim. This allows them to hold the debtor responsible for the amount due.

Not all property liens are bad. For example, a mortgage lien is a common property lien and rarely impedes real estate transactions. Liens are usually separated into two categories, voluntary and involuntary liens.

• Voluntary Lien: Voluntary liens are settled during closing and do not delay the process. Examples of voluntary liens are a mortgage on your house, or a loan on your car. You accept that the lender has a financial stake in your property through a voluntary lien, and the lien is cleared when the loan is paid off.
• Involuntary Lien: Involuntary liens are place on your property, potentially without your consent or knowledge. This can happen if you have unpaid local or federal tax debt (tax liens), unpaid child support or a court ruling that you owe money (judgment liens), or if a contractor worked on your house and you did not pay them (mechanical liens).

If there is a lien on your property, you may not be able to sell or refinance until the lien is cleared. In the case of a federal tax lien, you may not be able to find any creditors willing to lend to you until the unpaid taxes are resolved.

For buyers, falling in love with a property may mean that they are willing to try to make the deal work despite the lien. Because the lien is attached to the property title, not the property owner, if the buyer chooses to go through with the deal they assume all responsibility for the lien and thus the unpaid debt.

How To Find Out if There is a Lien on a Property

Liens are public record, so if there is a lien on your property or the property you’d like to purchase, you should be able to find it. How you go about finding a lien may be a matter of which is more valuable to you: your time or your money. You can search for liens on your own, or you can hire a company to put in the work for you. There are three ways to conduct a title search.

Search County Records

When was the last time you took a trip to the county clerk’s office? You may need to make a stop at the local tax assessor’s office first to get information on the parcel number of the lot. With that knowledge, you can sift through information in your local county records. You may want to look for liens by searching both the address, as well as the names of the current and previous owners.

This will take some time, but it is free (though you may have to pay a small amount for copies of any records). The county clerk may even help you with any questions as well.

Use Online Tools for Lien Searches

There are online tools that you can use for a title search, like Property Shark and US Title Records. There may be some databases more local to your area as well (for instance, Maryland.gov offers an online property search).

Be aware, some of these tools only work in more populous or urban areas. Rural data is not always available online. While there is often a fee for this kind of data, it is cheaper than hiring a title company.

Use a Title Company

Hiring a title company means hiring someone experienced in searching for liens or other red flags on a property. You do not need to be actively conducting any real estate transactions to hire a title company; you can do so at any time.

For a nominal sum, the title company will conduct a property title search and put together their findings in an easy-to-understand report. The title agent will thoroughly check land records and discover any unpaid property taxes or lien holders related to the asset.

RELATED: Buying a House With a Tax Lien? Here’s What You Should Know

What to Do About Personal Property Liens

If you’ve discovered that there is a judgment lien, a tax lien, or a mechanical lien on property that you have interest in, what are the next steps?

You may find that the lien has already been paid off, and you need to contact the creditor with proof in order to secure a lien release.

If you are trying to conduct property transfers like buying or selling a home, the debt must be settled to get the lien released. Typically, this must be done in order to continue the real estate sale, but there are occasions where you can still get a home loan when there is a tax lien involved. If you already own the home, you will need to know what you can do about a lien on a house from the previous owner.

It is often not a good idea to try to continue with a home sale if there is a lien involved—at least not without speaking with an experienced attorney beforehand. For instance, if you are buying a foreclosure with a lien on it, you assume all responsibility for the lien and the debt that caused it.

For federal tax liens, it may be possible to get a tax lien subordination, which can allow you to refinance or take out a second mortgage.

RELATED: What Is a Federal Tax Lien Subordination?

S.H. Block Can Help You with Property Liens

Because liens are complicated and prevent the purchase of your dream home (or selling your current one), the help of an experienced tax attorney can be invaluable. A good tax lawyer will explain your options in plain English and help you make the best choice based on the situation.

At S.H. Block, we have decades of experience dealing with liens. We have helped countless people figure out a way to continue with the purchase of their dream home in spite of a property lien. Buying a home is one of the most important choices in your life, so don’t automatically let that dream die just because of this hurdle. We may be able to help.

For more information, or a free consultation regarding your current situation,  call (410) 872-8376 or fill out this form and we’ll get started on a solution.

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.