You are ready to sell your house, and you want everything to run smoothly. That may be much easier said than done if you have a lien on your home. Property liens are fairly common, but they can make selling your home much more difficult.
Having a property lien does not mean that you are doomed to be stuck with your house forever. Rather, they are commonplace debts that can often be resolved with minimal hassle. Before you attempt to sell your home, read our two-part series about understanding property liens.
Defining a property lien
When a homeowner has an unpaid debt, a legal notice called a property lien may be put their file. It means that if the property is sold, the homeowner's creditor is entitled to a certain amount of money from the sale as payment. Until then, the house is considered collateral against the debt.
The three types of liens
A lien can result from several different types of debt, including missed mortgage payments, unpaid contract work or back taxes. There are three main types of property liens:
1. Some of the most common home-related debts involve contractors who were hired but never paid. These could include mechanics, painters, construction workers or construction companies. These contractors may file what is called mechanic's lien on your property.
2. A court may impose a judgment lien if you recently lost a court case. This means that the party who sued you holds a lien against your house until they receive their court-mandated payment. Attorneys can also file judgment liens if their fees have not been paid.
3. Owe back taxes? Beware a tax lien. The government could file a tax lien against your property if you have not paid your local, state or federal taxes.
This concludes the first post in our two-part series on property liens. In our next blog post, we will examine how property liens may affect the sale of your house. We will also explore what you can do if your house has a lien on it.