Is There a Lien on My Property? Understanding Home and Car Liens

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When a lender loans you money, they have done their homework and analyzed the risks of lending it to you. But to be safe, many creditors also find a way of claiming your property if you don’t pay up. And that is where property liens come in.

What Is a Property Lien?

A property lien is a creditor’s legal right to a property they intend to use as collateral if the borrower doesn’t pay off their debt. The claimed property will depend on the creditors and what kind of debt you owe them. But it will serve as collateral until you have completed the required payments.

For example, a mortgage lien is a legal claim to your mortgaged property. Your mortgage lender puts that legal claim to the property and only removes it after you have completed your mortgage payments. But if you default on the payments, they can sell your home and get the remainder of the money you owe from the sale proceeds.

It is worth noting that liens on a property are public. Creditors tend to issue a lien on properties as a notification to inform other people with interests in the property that someone else has a prior claim. If you sell a home with a lien, you cannot issue a clear title to the buyer until the lender gets their share of the sale proceeds.

Car liens also exist. That usually happens when you purchase a vehicle using a loan. The auto loan lender can record the lien to act as insurance if you default on your loan payments. And if you fail to clear your debt, the auto loan lender can repossess the car.

You may also have to deal with a mechanic’s lien. Any subcontractor or supplier who helped improve your property but did not receive payments for their products and services can make a legal claim on your property with a lien. Unfortunately, even if you pay your contractor, but they fail to pay the rest of the suppliers and subcontractors, you may still have to deal with the lien.

A lender can also record a judgment lien against your property. Unlike a car or mortgage lien, a judgment lien can  be issued against you after a creditor moves to court to sue you for defaulting on loan repayments. If the courts favor the creditor, they obtain a legal claim on your property, enabling them to compel you to pay your debts.

You are more likely to deal with a judgment lien if you have an unsecured loan, such as credit card debt or medical bills. In addition, if you don’t pay your taxes, the IRS may attach a tax lien on your property.

How Do You Find a Lien on Your Property?

If you owe an auto or mortgage lender money, you may ask yourself, “How do I find a lien on my property?” That’s because the chances are high that your lender has put it there.

However, it’s best if you also learn how to check for liens on a property when you intend to buy it from someone else. Never assume that a car or home title is free and clear.

Below are tips on how to find if a property has a lien.

  • Putting a lien on a property is akin to issuing a public notification of a private debt. Look for property liens where your county’s official records are held. That could be your local county assessor’s, recorder’s or clerk’s office. When in doubt, call and ask.
  • Make sure you know how to search for property liens. Your home’s address will determine which county’s records you should check out. If you live on the border of two counties, search both counties’ records to be sure.
  • If your county records office has an online website, you could use your property address to check for liens. Otherwise, you can go in person after setting up an appointment.
  • If you don’t want to bother with checking for property liens on your own, you can hire title search companies to do the job for you. Alternatively, you can hire a real estate lawyer.
  • There are usually fees associated with accessing a lien report. How much you end up spending depends on your county fees and whether you searched on your own or paid a professional to do it for you.
  • Be sure to note who filed the property liens, when they filed them, and the amount of money you need to pay to get a lien release.
  • When investigating a car lien, first check the vehicle title to determine whether it has been included.
  • Using your car’s vehicle identification number (VIN), search your state’s transportation or DMV website to get the car’s history report to determine whether vehicle liens are present.
  • You can also pay a vehicle title search company to investigate car liens on your behalf.

How to Remove a Property Lien

It’s good to know how to remove a lien on a property to regain a clear title on it. To do this, you need a lien release, and a public notification filed at the county records office or your local DMV. It shows all interested parties that you have paid off your debt and now claim full ownership of your property. It may need to be signed in the presence of a notary public, so take note of that.

If you have already paid your debt, you should contact the lenders, ask them to update the information and release the lien. You may have to show your receipts. On the other hand, if you haven’t paid off what you owe, you can do so before asking for a lien release.

It is also worth negotiating your debts downwards or disputing them if they have errors. And always ensure you receive verification that your liens have been released to avoid title issues later. In most cases, the lender will send you the released copy of the title after securing all the loan payments.

If you have no way of paying the lien, you have the option of selling your property. First, however, the buyer must accept to clear the remaining debts to get a lien release and clear title. Alternatively, you can use some of your sale proceeds to pay off the debts and then transfer the now clear title to the buyer.

How to File a Lien on a Property

You can also file a lien on property belonging to someone who owes you money. But first, you may need to notify the debtor of your intention to do so and then go to court to obtain a judgment against that person.

If the judge grants you that right, you can draft the lien, including all the property and debt details, then file it at the county recorder’s office after paying the required fees. Afterward, you may need to notify all the relevant parties that there is a lien on their property.

However, if you file a mechanic’s lien, there may be no need to go to court first. Instead, follow your state regulations on notifying the parties involved and then file the lien.

Putting liens on property tells the world that the property owner owes a debt that they have not repaid. If you are the one whose property has a lien, your credit scores may be impacted. In addition, you may not be able to obtain a clear title or transfer it to someone else if you choose to sell your property. Make sure you understand liens on your property before you decide to sell or transfer it.