How to find liens on a property: A home buyer's guide

Before you make an offer on a home, it’s critical to make sure it's free of liens. A lien is a legal claim on the home, usually associated with a debt. Liens must be cleared before a sale can close, so you'll want to know how to find out if a property has a lien. Liens are typically found in the title search, but you also can look for them yourself by searching public records.

What is a lien on a property?

A lien is a legal claim against a property. It entitles the lienholder to recover a debt when the property is sold or refinanced.

There are voluntary liens and involuntary liens. A voluntary lien is one you agree to take on, such as a mortgage lien. This is a lien your lender places on your property until your loan is paid off.

Involuntary liens are usually imposed on your property by debtors seeking repayment. For example, if you fail to pay property taxes, the tax authority may place a lien on your home. These liens remain until the debt is paid.

Types of liens

Common liens on property include:

• Mortgage liens. Your lender will hold this lien for as long as you have a balance on your mortgage. It is placed on a property's title and stays there until the mortgage is paid off.
• Property tax lien. If you fail to pay your property taxes, the county or tax authority will place a lien on your home. This can force the sale of your home to cover the unpaid tax bill. Even if it was a previous owner who failed to pay the tax, you as the current owner may be liable.
• Income tax liens. When you don't pay your income taxes, the government can put a lien on your property and take what you owe out of the proceeds when you sell it.
• Judgment lien. If someone successfully sues you and is awarded a judgment, they can place a lien on your property to assure payment.
• Mechanic's lien. If a contractor or vendor did work on your home and wasn't paid, they can file a mechanic's lien – also known as a contractor's lien – on your property.

How to look for property liens

How do I find out about liens on a property? There are a couple of ways to check lien status.

1. Get a title search

Your lender will require a title search as a condition of the loan when you buy a home to ensure. This is to ensure there are no liens, encumbrances, or unexpected claims of ownership on the home. If the title search reveals unexpected liens or encumbrances, they must be resolved before the loan can be funded.

2. Search public records

The public records process is straightforward, as most counties allow you to search their records online through the county recorder's or assessor's office website.

While these searches are usually free, you might pay a nominal fee if you want to make official copies of relevant documents.

3. Use a third-party website

You can use reputable third-party title websites to search public records by address or owner's name. These tools often compile public records into a single location, making the process faster and more convenient. They often require a fee.

What you’ll find when researching property liens

Key details you'll find in a lien search include:

• Lienholder's name. Identifies who is owed the debt attached to the property.
• Filing date. Shows the date of the recorded lien and helps determine priority over other claims.
• Document number. Provides a unique record ID used to track and verify the lien.
• Amount of the lien. States the total debt that must be paid to clear the claim.
• Lien status. Indicates whether the lien is satisfied or remains unpaid.

What an unsatisfied lien means for a real estate transaction

An unsatisfied lien creates immediate risk and must be addressed before closing.

• It prevents a clear title, which most buyers and lenders require before a sale can move forward.
• It can delay or derail a transaction if not addressed in time.
• It typically must be paid off at or before closing, though some liens can be negotiated or discharged depending on the type.
• Federal tax liens can follow a property even through a sale if not properly handled.
• Left unresolved, liens can lead to foreclosure or legal action.

The role of title insurance

Your lender will require you to pay for the lender's title insurance, which protects the lender if the search fails to report a lien or encumbrance that later comes to light.

You can purchase buyer's title insurance to protect you against unknown liens or encumbrances.

How to remove a lien on a property

If a lien is found on a property, it'll need to be lifted before you can buy it. Here’s how you can get rid of a lien:

1. Pay off the lien

If you're interested in a property with a lien, insist that all liens be cleared before closing and make sure your purchase agreement specifically addresses how they'll be handled. Work with a title company to verify the liens are properly released and be wary if a seller suggests dealing with liens after the sale – that’s a significant red flag.

2. File a dispute

If the lien is invalid, the seller can dispute the lien. They would start by gathering documentation that proves why the lien is invalid, such as payment records or evidence that proper procedures weren't followed when the lien was filed. The seller can file a formal dispute with the county recorder's office, and you may need to schedule a hearing where you can present your evidence and argue your case. If you believe the lien was filed wrongfully or fraudulently, consider working with a real estate attorney who can help navigate the legal process and potentially file a lawsuit to have the lien removed.

3. Request a lien release

If a lien has been paid but it's still showing up on the property records, request a lien release form, sometimes called a "satisfaction of lien" or "release of lien.” Once you receive this signed and notarized form, file it with your county recorder's office to officially clear the lien from your property's title. If the original lien holder is unresponsive or no longer in business, you may need to provide proof of payment and file an affidavit with the county recorder's office explaining the situation.

The bottom line on how to find property liens

Finding and resolving any lien issues is a critical part of buying a home. Fortunately, there are several ways to find out if a property has a lien and resolve any problems. The key is doing your due diligence before purchasing, which also includes having a mortgage ready to go.

If you're ready to buy a home, explore your borrowing options with Rocket Mortgage today.