- Written By: Jessica Hobby
- Edited By: Heather Bailey
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2003-2012 Conjecture Corporation
A home lien is a legal claim against your property which can contribute to significant problems if you try to sell or refinance your home. In the worst case scenario, it can lead to property foreclosure. In order to avoid any of these stressful situations, it is important to understand when someone can put a lien on your house.
People with a lien on their home most frequently encounter a property lien. When you take a first mortgage on your home at the time of purchase, the lending institution places a claim on your home until the mortgage is paid in full. In the event that you become delinquent on your mortgage payments, your lender will enforce the lien and foreclose, or claim ownership of your home. If you take out a second mortgage or a home equity line of credit on your home, your home also becomes subject to lien. In this case lenders may also foreclose on your house if you default on your payments.
Tax liens are another common type of lien that can be placed on your home. If you fail to pay your local, state or federal taxes, the federal government can place a claim on your house for the amount owed plus additional penalties, fees and interest. In the United States, the Internal Revenue Service is responsible for the enforcement of tax payment and the placement of tax liens.
If you work with a contractor, such as an electrician or a plumber, and don’t pay your bill, they can place a mechanic's lien on your home. In the event that you make payment arrangements with a contractor on large home improvement projects, you may have authorized them to make place a lien on your home if you make any late payments. Many times, contracts will record a lien and choose not to take it to court. The claim will remain on your home and cause you difficulty if you try to sell or refinance.
If a contractor, or any other entity, sues you in court and you lose, the court can file a judgment against your property. The judgment will remain against your home until you pay your debt. Credit card companies may also try to attain a judgment against you in court and may also file a lien against your property if you have used your home to secure a business or personal loan.
Some other instances when a lien can be placed on your home occur when you break certain laws. If you commit an environmental violation such as neglecting to clean up your garbage, the court may file a claim against your home. Similarly, traffic violations such as speeding tickets and parking tickets are another way to have a lien placed on your property.
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Crispety
Post 3 |
GreenWeaver - I agree and this is why I think that short sales are so hard to sell because the homeowners usually have additional liens on the property.
I almost purchased a short sale property but the bank wanted an additional $70,000 to settle the second mortgage lien placed on the property.
For me as a buyer it was easier to find a bank foreclosure so that I would not have to deal with these hidden landmines. |
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GreenWeaver
Post 2 |
Mutsy - I know what you are saying but on the flip side some people stay away from homes that have liens on them.
For example, at foreclosure auctions that are given at the courthouse steps many of the homes have significant liens on them. In order to buy these homes safely you would have to do a title search which can cost about $500 on each property that you are interested in order to make sure that the title is free of liens because if you are the winning bidder than you will assume the responsibility for these liens.
This is what happened to an investor in New York that purchased a home at a courthouse auction. He purchased the home at $40,000 below market value but the home had $60,000 of unpaid liens that he did not know about.
This is why if you are seeking to buy at an auction it is better to look at a bank auction. Bank auctions are different because the banks already cleared the liens and have a clean title to the property.
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mutsy
Post 1 |
In my opinion, it is a better to hire a lawyer to see how about to receive payment from the lien. Even if you receive a judgment in your favor in court, it does not mean that the defendant will pay, but an attorney could at least settle with the defendant so that you can get some money.
If the amount is high enough the lawyer may try to push the sale of the property.
A mortgage lien could be place for unpaid utilities, and unpaid homeowner’s association dues.
In fact there have been cases in which a homeowner’s association was able to foreclose on a property with delinquent homeowner’s association dues.
If you are thinking of filing a lien you would have to go to the county office and file a clam under the land records. The bad thing about the lien is that you will only get your money when the house is sold. If the homeowners never sell the home you are out of luck. |
