If you are purchasing your first home or representing someone who is, you should not let excitement get the better of you. After all, when you close on the deal, it is important to know there are no issues with legal ownership of the property. If a house has a lien, though, you may be in for a potentially costly surprise.
There are two types of residential property liens that may affect the sale of a home: voluntary and involuntary liens. A voluntary lien is one the property owner agrees to accept, such as a mortgage. An involuntary lien, by contrast, attaches to the property without the owner’s consent.
Identifying common involuntary liens
If a property has a mortgage, the lien is likely to lift when the owner pays off the mortgage at the time of sale. Involuntary liens, though, may be steeper hurdles to jump. Here are some common involuntary liens that may tie up a piece of residential property:
- A judgement lien, where a creditor has a stake in the property after securing a victory in court
- A construction lien, where a contractor did not receive payment for work on the home
- An income tax lien, where the IRS tries to collect back taxes
- A property tax lien, where the state government tries to collect unpaid property taxes
- A child support lien, where the recipient tries to collect unpaid child support
Finding liens early
Because some types of liens attach to the property, you may be legally responsible to pay for the previous homeowner’s actions. Therefore, it is critical to perform a title search and take other necessary steps to find all liens on the property before closing. Ultimately, with a bit of work, you can ensure the home you buy belongs exclusively to you.