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What to Know About Property Liens

Jan 09, 2023

For both homebuyers and homeowners, understanding how property liens work is important. In fact, they could impact your ability to buy a specific house or make a home cost more.

Fortunately, finding out if a property has a lien against it isn’t too hard — nor is settling a lien once one is in place.

Here are common questions and answers about property liens to help cover the important facts.  

Q: What is a lien? 

A: A lien is a claim against a home or other asset (boat, car, etc.). It means the owner owes an entity money, and unless the debt is settled, the debtor can seize the asset to cover the unpaid balance. There can also be tax liens against the property when the owner doesn’t pay their taxes.

Q: Can you still buy a home if it has a lien? 

A: You can buy a home that has liens against it, but there are risks. Most importantly, a lender won’t give you a loan until the lien is settled. 

Q: Should you avoid a home with a lien against it? 

A: If your dream house has a lien against it, you will need to settle the lien before buying it. You could pay the liens off yourself as part of the purchase or, in many cases, the seller can use the sale profits to settle them before closing.

Q: Are there ways to protect yourself? 

A: It’s a good idea to work with a title agency with buying a home. They will be able to do a title search and identify any liens against a home you’re interested in. You can also purchase title insurance, which protects you if any unknown liens surface later on. 

There are other topics you’ll want to familiarize yourself with before becoming a homeowner. Get in touch today for more guidance.