A lien against property in a real estate transaction can pose a problem – both for the buyer and the seller.

A property lien is a notice to the public (including homebuyers) that the property’s owner allegedly owes a debt. Sometimes creditors put liens against property as a means to get paid.

If there’s a lien against your property, you usually can’t sell it without settling the debt.

Where Do Most Liens Come From?

Most property liens in real estate come from unpaid taxes, court judgments or unpaid debts a person owes to contractors and other creditors.

Major Types of Liens

Creditors can place several types of liens against a property, but the most common are:

  • Judgment liens
  • Mechanic’s liens
  • Tax liens

Judgment Liens

A judgment lien can only occur when you lose a court case and the other party files it. The judgment lien remains attached to your home until you pay the other party.

Mechanic’s Liens

A mechanic’s lien is a kind of insurance that helps contractors, carpenters, painters, plumbers and others get paid. These contractors file the lien against your property and remove it once you’ve paid them what you owe.

Tax Liens

The government can file a tax lien on your home if you don’t pay your federal, state and county taxes.

What Does Any of This Have to Do With Real Estate?

When a buyer makes an offer and your home goes under contract, the title search company will look for liens. If they find them, the transaction gets put on hold until you settle the debts (either by getting the other party to agree to lift the lien or by paying them).

Your buyer’s mortgage company won’t fund the deal until the lien is satisfied.

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