A lien can be placed on your property without your immediate knowledge. Typically, when someone places a lien on your property, they are required to notify you. However, communication delays can prevent you from being informed right away, especially if your mailing address is outdated.

Any liens against your property become public records when they are recorded in the county records office, but you may not be directly notified.

What is a lien?

A lien is a legal claim or encumbrance on a property to secure a debt or judgment. It can be either voluntary or involuntary. A mortgage or home equity loan is a voluntary lien that homeowners take on when they accept a loan to purchase property. The bank or mortgage company holds a lien on your property until you repay your mortgage loan.

Examples of involuntary liens include:

• Judgment liens: If someone wins a lawsuit against you, they can place a lien on your property to secure the judgment. The person suing you will receive a certificate of judgment that they will file with the county land records office, placing a lien on your property.
• Contractor’s (mechanic’s, builder’s) lien: If you hire a contractor, builder, or supplier to fix or improve your property and you do not pay the bill, they can file a contractor’s lien against your property until you pay their bill.
• Tax liens: The government can place a tax lien on your property if you fail to pay your taxes. The Internal Revenue Service will assess your liability and send you notice. If you do not pay your overdue taxes, the IRS can place a lien on your property.
• HOA lien: A homeowner’s association can place a lien on your property if you have neglected to make payments or pay required dues. They must notify you in advance following the HOA bylaws.

A lien is recorded publicly in the county recorder’s office. Until the lien is cleared, homeowners can find it challenging to sell or refinance their property.

A lien holder, whether voluntary or involuntary, can force foreclosure on your property if you do not or cannot pay your debt. If the lien is valid, the lien holder can ask the court to file an order to sell your property. This process is governed by state law.

Lien holders are paid in a predetermined manner. For example, a property tax lien is paid before a mortgage lien. If a homeowner does not pay their property taxes, both they and their mortgage holder may lose the property to foreclosure.

Can someone place a lien on your property without you knowing?

In most cases, a creditor, contractor, or government agency is required to notify a property owner before and when they file a lien on the property. However, it is possible that they unknowingly send the notice to an outdated mailing address, or the filing is somehow overlooked.

How can you avoid an unknown lien on your property?

Since liens are public records, homeowners can do a title search on their property if they are concerned that a lien has been placed on their property without their knowledge. It is a good idea to check on your property’s title periodically, especially if you are considering selling your property or refinancing your mortgage.

Ensure that all contractors and suppliers have your current contact information. When having repairs or services done on your property, be sure to have a signed contract that clearly lays out the amount owed and the repayment terms. If you ensure all contractor and supplier bills are paid on time, they will not be able to place an unexpected lien on your property.

If a creditor is forcing a foreclosure on your property to recover funds that are owed to them or you discover an unexpected lien on your property, consult with an attorney. They can help you dispute it in court if you believe the lien is fraudulent or an error.

What is a lien release?

A lien release is an official notice that a lien has been removed. Once a debt has been paid, the property owner typically has the creditor sign a lien release and file it at the county recorder’s office, at which point it becomes public record.

Discovering an unexpected lien on your property can make it difficult to sell your property or refinance your loan. A sale of property will be delayed until the lien is resolved.

If you have a legitimate lien on your property, the simplest way to resolve it is to pay off the lien. Once you pay off your debt, your property will be unencumbered, and you can move forward with your plans to sell or refinance.

If you cannot pay off the lien, consult with your lawyer to understand your options. You may be able to negotiate a payment plan with your lender, file for bankruptcy, or wait until the statute of limitations for the lien to expire. You would still owe the debt but could potentially sell the property to get the funds to pay your creditors.

You can schedule a call with us or reach out to us directly at 855.631.3457 to learn more about how best to plan today to protect those most important to you.