Property Lien: What They Are and How They Impact Property Title

A property lien is a legal document (i.e. a claim on assets) allowing the creditor to collect money or obtain access to the property in case you don’t pay your debts. Before being delivered to the property holder, every property lien is to be approved by a state agency or a country records office; only then can things be set in motion for the repossessing of a specific piece of property. A property lien is filed with a county records office for real property, or with a state agency for equipment, cars, boats, and the like. Although less frequent, liens on personal property are also a way for someone to collect.

What Are Perfected and Unperfected Liens?

Perfected and unperfected liens are two types of property documents:

  • Perfected liens are binding documents filed with the right agency, giving the third party creditor’s notice of the lien. They are legal documents “for which a creditor has established a priority right in the encumbered property with respect to third-party creditors.” A creditor with a Perfected Lien takes priority.
  • Unperfected liens are documents that haven’t been filed with the appropriate legal authority, resulting in other creditors having the right to claim on the property.

 

How a Lien Affects Your Property?

To refinance or sell a property altogether, you need to have a clear title. If you have a lien on your car, motorcycle, mobile home, your house or any other type of property, your claim is considered not clear and therefore you are not in the position to sell. The only way to clear up the title is to pay off the lien. On that note, putting a lien on your property puts creditors in the driving seat as they know they are guaranteed to (eventually) collect what they are owed.

Can I Sell a Property That’s Encumbered by a Lien?

In theory – everything is possible. However, for you to sell your property and stay within the law, you need to take care of the debt. Otherwise, it’s not just that you won’t sell the property (at least, not to anyone honest), but you’ll get labeled as a shady homeowner who is looking to sell his property with a lien attached. And, well, you don’t want to have that reputation, do you? So, for your (potential) buyer to allow for a transfer of clear title, liens must be paid.

How Do I Check for Existing Liens When Purchasing Property?

If you’ve got an eye on a piece of property, make sure there is no lien to keep you from securing a clear title to the property. Usually, no mortgage financing will be provided by a bank or other mortgage lender until all liens on the property have been removed. A title search is the first best indicator whether a property is lien-clear and if the owner exists as a legally recognized property holder. The best way to find out if a property is with a lien is to hire an abstract company or an attorney to conduct the title search for you.

Property Lien Disputes

Property lien disputes are more common than you think and if you are having one, contact Golden Tax Relief professionals: our team may be the best choice to help with this particular matter. Browse through our services and let our experts find the solution to your problem.

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