How to Find Out If There Is a Lien on Your Property

 In Credit

There’s so much to consider when buying or selling a house. Not only do home buyers have to think about location, price, features, and other interests, but a lien on Florida properties can make it tough to sell in the future and can be costly to resolve. The same goes for those looking to sell a Florida home with a lien on the property. The process is far from easy, and the details can really go overlooked and be misunderstood. The fact of the matter is that a lien on a Florida home is going to make things complicated, and it’s best to inform yourself from the start so you can make informed choices along the way. 

Here’s how to find out if there is a lien on your property.

What Is a Lien in Real Estate?

A lien is one of those real estate and homeowner terms most people have heard, but few understand. Anytime a lien is mentioned in property ownership, it’s a claim against the homeowner’s rights to a property. If a lien is on a house, the creditor who holds a debt related to the home is holding a stake in the home to help collect debts owed by the property owner. In most cases, a lien can occur in two ways.

Firstly, homeowners can agree to a lien, much like they agree to a mortgage. In this situation, a contract gets written with the creditor to hold a piece of the value of a property until debts can be returned. In these cases, the title and homeowner’s rights to the home are not in danger. For the most part, it’s just a way to help settle debts that involves the most comprehensive path forward to repayment.

An involuntary lien is also possible, which is not consented to by the homeowner. In these cases, something like a tax bill or renovation goes unpaid, and a creditor places a lien on the home until they get their money. When this happens, you cannot sell a property easily because public records will make it easy for interested parties to see that there’s a lien on the property.

An Example of When an Involuntary Lien Might Occur

For clarity, let’s consider an example. 

A homeowner decides to get a garage built onto their house. The process is going smoothly, but as it turns out, the homeowner doesn’t have the money to cover the costs of the addition. Until the garage contractor is paid, they can place a lien on the house to make sure they hold some claim to their owed money. Now, it’s up to the homeowner and debt holder to clear the lien. So, how do they do it?

When Does a Lien Go Away?

Basically, a lien is a creditor’s way to show that until they’re paid, they have some right to a portion of the home. Once the creditor is paid, they can remove the lien. However, this doesn’t always happen. And if the lien continues on the loan—despite the debt being paid—it can make it hard for a homeowner to sell their home. It’s crucial that the lien gets taken off the record.

What Does it Take to Resolve a Lien in Public Records?

A lien sits on the public record and is often forgotten about by most creditors. When government holders like the IRS get paid back for their bill, they automatically provide you with the lien release papers. Usually, you get those papers within two months of the final payment. 

In the case of involuntary liens, most creditors don’t remember or actively seek out to provide homeowners with lien release papers. To many of them, once the debt is paid, they’re fine to move on. Unfortunately, you’re going to want that off the record, so they’re going to have to be notified by the homeowner to sign a lien release.

In a lot of cases, the lien process is something many creditors in an involuntary lien get frustrated with. Because of this, they might not rush to get you what you need out of pure dismissal. To avoid this, many property ownership experts suggest getting lien release papers signed before final payment to an involuntary lien creditor.

Once the papers are signed, they must be notarized for the county to release the title of its lien. Bank notaries can sign these release forms, and then the homeowner must submit the papers to the county recorder’s office. Then, and only then, is the lien officially off of the property.

Does Title Insurance Protect Property Owners Against a Lien?

While mortgage insurance can help protect a lender if a homeowner defaults, what can a homeowner do to protect themselves against a lien?

Purchasing a title insurance policy may help. The policy manager for the insurance company reviews the title’s claims, and then can provide a policy for the owner. If a lien is placed on the property, the insurance protects against unfounded liens. These include things like heirs or claims to the property via familial relations, errors in the buying process, or forgery. Through this sort of title insurance, anything that has occurred in the past is not going to fall on the homeowner’s shoulders. However, it won’t do anything against valid lien claims.

Who Can Help Solve Lien Issues?

If you’re in the process of dealing with a lien issue on your property, then the team at the Associates Home Loan of Florida are here to help. 

The best thing you can do when pressed with the complications of a homeowner lien is to turn straight to the experts. For Florida homeowners, there is nobody more qualified or excited to help you through the homebuying process, lien or no lien. As experts on mortgage questions big and small, Associates Home Loan of Florida is waiting to help you over the phone or online. 

Ready to find out more? Call (813) 328-3632.

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