Information on Property Liens
When a property has liens the lien holder has a secured interest in the property. A mortgage loan is one type of lien. The property is pledged as collateral for the loan.
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Significance
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When a home is sold all liens must be paid off first by the proceeds of the sale. Sometimes there is not enough cash to pay off liens and other arrangements have to be made. There are situations where this can delay or prevent the sale of a property.
Effects
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When a lien is paid off a lien release is sent to the county courthouse. The lien is then removed and recorded in the public records as paid in full.
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Warning
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A property can have more than one type of lien against it. A house can have a tax lien filed for non-payment of taxes. If you hire a contractor to work on your home, he can file a mechanics lien on your property if he is not paid as agreed.
Identification
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When someone takes out a mortgage loan a lien is filed on the property. You can also have a lien filed when you apply for a home equity line of credit, (HELOC), or a home equity loan.
Expert Insight
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The liens in first place have top priority. This means that the lien with the earliest filing date will get paid first if the home is sold or goes to a sheriff's auction to be sold.
Prevention/Solution
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A title company will do a property search to see if there are any liens or mortgages on a property.
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