Knowing what happens when a lien is placed on your home ahead of time will save you not just time but a lot of frustration when it comes time to closing on your home.
Rosie and her husband had a dispute with a plumber one day who did some work on their house. They claimed the work wasn’t done properly, but the plumber begged to differ. When neither wanted to budge or bother with arbitration or legal fees, the dispute brushed over during the following months. At least that’s what Rosie thought.
Come to find out, the plumber couldn’t force Rosie into a foreclosure sale to get his money faster because there was a mortgage lien in 1st position on the property. So he decided to wait it out.
They lived in the house for 3 years thereafter. When the couple decided to sell their house the title company informed them they had a mechanics lien on their house they would have to pay before they could close. This is what the plumber was waiting for of course.
Rosie and her husband were forced to sort their differences out with the plumber and decided to pay him what was owed to be rid of the issue. They closed 9 days later than planned. It was a big inconvenience but they learned a number of valuable lessons in the process.
Like Rosie and her husband, it is quite easy to think that a bill will just go away. In reality this sort of payment dispute rarely just disappears. If your differences are not resolved with a creditor, that financial feud could show up as a lien on your property making your life a bit difficult when the time comes to sell your home.
If you are new to the world of property liens in Utah and what to do if you have to face such an issue, let’s go over the basics.
What is a property lien?
Overall, a property lien is a legal right or interest a creditor has in your home or land. The recorded lien encumbers your property until paid. It can exist on your property for years until the debt is disputed and/or removed and satisfied.
A lien is generally on public record. This means you can look it up on the county records where you live in most states, including Utah.
There are other types of property liens that can be leveraged and placed on things such as RV’s, brick and mortar stores, equipment, motorized sports vehicles like a 4 wheeler, racing bikes, and so forth. In such cases a lien could be filed with the secretary of state.
And as you learned from the case of Rose and her husband, liens must be resolved before a piece of property you own or control can be sold.
What type of property liens are there?
There are two major types of property liens that can be recorded and associated to your property:
- Involuntary lien
Involuntary liens occur when you have financial obligations left unpaid. Like Rose and her husband they experience an involuntary mechanics lien on their home after a financial dispute with a plumber. These types of liens can also be triggered if there is a tax bill that goes unpaid. These liens negatively affect your property title.
Voluntary liens as the name implies is where you voluntarily enter into a lien agreement with a 3rd party of your choice. This normally happens when securing funding for the purchase of your home. Your mortgage company will usually hold 1st lien position on your home or property until you sell ownership or when paid off in full. These types of liens do not cloud up or negatively encumber your property title.
There are many additional types of lien classifications. The basic list though comprises of the following:
- real property liens
- described above
- child support liens
- if you don’t pay child support a lien can be placed on your home.
- judgement liens
- when a creditor records a lien on your property after they pursue legal proceedings to secure their financial interest is paid.
- mechanics liens
- anytime you fail to pay a contractor, plumber, carpenter, etc
- mortgage liens
- as described above this is a voluntary lien.
- property tax liens
- when taxes go unpaid the IRS, the county or state, etc can place a lien on your property.
How to remove a lien?
The quick answer is to satisfy the demand of the lien by paying the debt owed. The long answer is you may need to following up with the state government to send you documentation of the lien being lifted. In other situations the lien will be automatically removed. But overall it’s best not to assume your property lien will be lifted. Instead be pro-active by communicating with the 3rd party in question and confirm the debt has been paid so you can avoid further discrepancies if/when you sell or close on your home.
If you think you’re going to encounter some issues having the lien removed from record it’s better to have the 3rd party sign a notarized lien waiver agreement here. You agree to make the final payment after they sign the lien waiver.
What to do if you cannot afford to pay the lien?
If you are in a situation where the property lien is voluntary or involuntary on your home we can help at GaryBuysHouses. We buy homes “as is”. Yes, that means encumbered property. Whatever situation you are in reach out to us here and in 10 minutes or less we will give you a fair cash offer for your home or property that has liens from any source. We have a professional legal team standing by to make the whole process run smoothly for you.