How Does a Lien Affect My Property?

A lien is a legal claim against a property that is recorded with the local county, giving the lienholder a legal interest in a property. Liens are generally granted by a property owner or by a court. Once granted or awarded, the lien is filed against a specific parcel of property and recorded with the local county recorder.

Key Facts

Restricts Property Sale: When a lien is placed on a property, it becomes a public record of a legal claim against the property due to an unpaid debt. This can prevent the homeowner from selling the property.
Mortgage Approval: Lenders typically do not approve mortgages for potential buyers if there is an existing lien on the property. The lien must be lifted before a mortgage can be approved.
Types of Liens: There are different types of liens, including tax liens, general judgment liens, and mechanic’s liens. Each type has its own specific implications and requirements.
Impact on Credit Score: Some liens, such as mechanic’s liens and judgment liens, can be reported and may affect your credit score. Your repayment history, which includes liens, plays a significant role in determining your credit score.
Removal of Liens: Homeowners can remove liens by making payment arrangements or settling the debts. Once the debt is paid off, the lien can be lifted, giving the owner full and clear title to the property.

Restricting Property Sale

When a lien is placed on a property, it becomes a public record of a legal claim against the property due to an unpaid debt. This can prevent the homeowner from selling the property because the lien must be satisfied before the property can be transferred to a new owner.

Mortgage Approval

Lenders typically do not approve mortgages for potential buyers if there is an existing lien on the property. The lien must be lifted before a mortgage can be approved. This is because the lender wants to ensure that they have a first-priority claim on the property in case of default.

Types of Liens

There are different types of liens, including:

Tax liensThese are liens that are placed on a property when the owner fails to pay property taxes.
General judgment liensThese are liens that are placed on a property when a creditor obtains a judgment against the owner.
Mechanic’s liensThese are liens that are placed on a property when a contractor or other worker is not paid for work that they have done on the property.

Each type of lien has its own specific implications and requirements.

Impact on Credit Score

Some liens, such as mechanic’s liens and judgment liens, can be reported and may affect your credit score. Your repayment history, which includes liens, plays a significant role in determining your credit score.

Removal of Liens

Homeowners can remove liens by making payment arrangements or settling the debts. Once the debt is paid off, the lien can be lifted, giving the owner full and clear title to the property.

Sources

FAQs

Can a lien prevent me from selling my property?

Yes, a lien can prevent you from selling your property because the lien must be satisfied before the property can be transferred to a new owner.

Can I get a mortgage if there is a lien on my property?

No, lenders typically do not approve mortgages for potential buyers if there is an existing lien on the property. The lien must be lifted before a mortgage can be approved.

What are the different types of liens?

There are different types of liens, including tax liens, general judgment liens, and mechanic’s liens. Each type of lien has its own specific implications and requirements.

Can a lien affect my credit score?

Yes, some liens, such as mechanic’s liens and judgment liens, can be reported and may affect your credit score. Your repayment history, which includes liens, plays a significant role in determining your credit score.

How can I remove a lien from my property?