One of the most common causes of delays in real estate transactions is the discovery and handling of a lien. Any recorded claim against a property – such as unpaid taxes – can be considered a lien. If the lien is tied to debt – like being behind on your mortgage payment – then the property a lien applies to is tied up until this debt is paid. The result can be difficulty selling or refinancing a home.
Though trying to understand liens can seem daunting, they are actually quite common in the real estate world. Several factors will determine how a lien can be handled, including the amount of the lien and the type of lien it is. In most cases, liens come from unpaid taxes, court judgments, or unpaid bills. For example, if a property owner misses a mortgage payment or owes a debt to a contractor, then a lien can be placed on the home.
The four most common types of liens on homes
The four most common types of liens on a home are:
- Mechanic’s lien. If a property owner has work down on their home and does not pay those who completed the work, then a mechanic’s lien can be filed against the property. Mechanic’s liens are most commonly filed by repair companies such as plumbers, painters, carpenters, and general contractors.
- Judgment lien. If a homeowner is sued and loses the lawsuit, then the plaintiff in the lawsuit can file a judgment lien against the home. Judgment liens are also filed by attorneys for unpaid legal bills.
- Tax liens. If a homeowner does not pay their taxes, then the government can file a tax lien against the property. This can include federal, state, and local.
- Foreclosure lien. A foreclosure lien involves a lender filing a lien against a home due to the borrower not paying their mortgage. It is also known as a mortgage lien, property lien, or real estate lien. The foreclosure lien is a necessary step that allows the lender to move forward with a foreclosure and obtain legal possession of the property if the defaulted mortgage is not brought into good standing.
It is important to understand that liens are against the property itself – not the owner of the property. As a result, if a buyer takes on a home with an unsatisfied lien, then the lien becomes the responsibility of the new owner, making it very important to the buyer.
PropertyShark allows you to seamlessly research liens on all New York properties. Simply search for your targeted address, click the Owner tab on the full property report and scroll down to the Liens section, which will show an up to date record of all liens tied to the address, their type, amount, expiration date and more. Check out the example below: