Liens are encumbrances against the title of a property, which means that they can prevent a real estate transaction from taking place. A lien indicates that a party, which can be an individual or a business entity, has interest in the property. The process of finding out liens on a property title usually takes place during a mortgage or home sale transaction.
Luckily for home shoppers and property sellers, liens are a matter of public record. For the most part, they can be easily found; however, in some cases they may require the professional services of an abstractor or a title insurance agent.
The most common type of lien is a mortgage or line of credit on a property. These liens have a monetary amount attached, which must be satisfied before a home can be sold under most circumstances. These liens can be usually paid off at the closing table, and in some circumstances a buyer may assume responsibility over the debt.
Other liens are the result of legal actions taken by creditors, contractors or other parties that wish to make sure they will eventually receive payment. Mechanic?s liens are often filed by home improvement contractors for unpaid labor or materials. Judgment liens are granted to creditors. Tax liens are imposed by the Internal Revenue Service (IRS) or a state revenue authority. Child support liens seek to satisfy arrears, and some states may attach liens to endure payment of attorney fees in family law cases.
Searching for Liens
County recorder offices can provide interested parties with a listing of all liens attached to a property by simply providing a name or a residential address. In some jurisdictions, tax assessor offices offer this service as well, which can be provided online or in person.
Abstractors are professionals who have access to certain tools such as databases and title plants where liens are carefully listed and catalogued. Some abstractors work on their own, but most employed by title insurance agencies. Retaining the services of a title insurance company is the best bet for home buyers and sellers when it comes to finding liens.
An additional benefit of letting title insurance agencies do the property lien search is that they are interested in getting additional business from homeowners or prospective buyers who might purchase a title insurance policy. Since title insurance agencies protect the homeowner?s interest in a property title, they make sure their lien searches discover all potential encumbrances.