The discovery of a property lien can stop your home purchase. Even with perfect credit and ready financing, an existing lien could block your path to homeownership. This often-overlooked detail carries significant weight in real estate deals. Yet, many buyers learn about liens too late in the process.
What is a property lien?
A property lien gives someone a legal claim against a piece of real estate when they’re owed money. The person or company that places the lien becomes a creditor who must get paid before the property can change hands. Here are the most frequent types of liens you’ll see:
- Tax liens from overdue property taxes
- Contractor liens from unpaid home repairs
- Court judgment liens from lawsuits
- HOA liens from missed association fees
- Bank liens from mortgage loans
These claims stay with the property regardless of who owns it, so checking for liens is essential before you buy.
How liens affect your purchase
A property lien changes everything about your home purchase:
- If you skip the lien search, you could inherit the previous owner’s debts.
- Most mortgage companies won’t loan money on properties with active liens.
- Liens often signal more significant money troubles with the property.
- The sale can’t move forward until all liens get cleared.
Steps for lien protection
Start with a title search through a qualified title company. They’ll dig through public records to find any claims against the property. If they spot a lien, don’t panic, but don’t ignore it either. Ask the seller to prove they’ve paid off the debt or get it removed before closing.
The rules about property liens vary by state and situation. A real estate attorney can guide you through the lien search process and help you avoid costly surprises. They’ll ensure you’re protected and advise you on the next steps if a lien appears in your search.
