How to Know What Types of Liens Can Affect Foreclosure On Your Home
As a homeowner, you are expected to make your scheduled payments on a timely basis. When you do not make your payments over an extended period of time, your financial institution or the government may be able to take possession of your property. Once a lien has been filed, you may find it extremely difficult to obtain loans, apply for new credit or seek alternative financing. Although property taxes and lien consequences vary by state, you may lose your home if you are careless with making your payments.
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Instructions
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Understand what a lien is. A lien is a security claim of monetary value that can be put against a piece of property. In other words, the security claim is something that must be paid so you can maintain the title of the property. When a lien is not paid, the debtor has the right to force the sale of the property so that they can collect compensation for the debt. This is called foreclosure.
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Establish whether or not you currently have a mortgage loan attached to your home. This is a voluntary lien, which is a security claim that you asked to be attached to your property. As soon as you sign a mortgage, your home is used as security. If you do not pay back the money you borrowed against the property, the property can be forced into foreclosure and sold. This form of lien should be your top priority for making payments before any other liens should be considered.
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Assess the types of involuntary liens that are attached to your property. An involuntary lien may come in the form of government or judgment of court demands, such as tax liens. All homeowners are required to pay property taxes. When taxes go unpaid, the courts have the right to declare foreclosure and sell your home at auction. After your mortgage payments, you should always make sure to make your tax payments.
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Determine whether you had any contract work done on your property. If you do not pay your contractor for work performed on your home, the contractor has the right to place a lien on your property. This can happen in new construction or large renovation projects. In most states, the contractor can attach a lien on your home with any outstanding bill from his contracting company. If this goes unpaid, your home may face foreclosure.
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Establish whether or not you are paying child support. If you are, some state courts have the right to legally attach a lien to your home until you make your payments. If you go without paying your child support payments over an extended period, the courts can seize your home for foreclosure.
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Tips & Warnings
Submit all of your payments on a timely basis to avoid involuntary liens from being placed upon your property.
