When selling your house, your property must be free and clear of any encumbrances so that you can convey good title to the purchaser. A home that is encumbered by a lien can prevent you from selling or even refinancing your home until the lien has been cleared. There are several parties that can place both voluntary and involuntary claims on your property.
Mortgages, second mortgages and home equity lines. A mortgage on your property is a lien that is recorded with the consent of the homeowner. It clouds title to the property and must be extinguished through a deed of release and reconveyance. The lender should release the lien by issuing the deed after the property has been sold.
Mechanic’s liens. Other types of liens can be placed on your property without your consent. These often present a more complex situation for the homeowner. The most common type of lien in this category is a mechanic’s lien, otherwise known as a construction lien. A contractor can place a lien on your property for labor or materials that have not been paid for by the homeowner. If the court in the county in which the property is located affirms the lien by the contractor, the contractor obtains the right to take possession of the property if the debt is not satisfied within a specified period of time.
Judgment liens. Similar to a mechanic’s lien, a judgment lien can attach to one’s property for a debt incurred by the homeowner. In a civil court case, after a judge or jury reaches a verdict or after the court approves a settlement, the court enters a judgment and orders the payment of money from one person to another. If the person who owes the money does not pay, a judgment lien can be filed by the person who won the judgment. The holder of a judgment lien also obtains a claim to the property in the amount of the lien that has been affirmed by the court.
Tax liens. The Internal Revenue Service can place a lien on your property if you are delinquent on your federal income taxes as security for the money owed. In general, a homeowner must owe at least $5,000.00 in federal taxes before the IRS will assert a lien on your property.
Any lien can be detrimental to future plans with respect to your property. If you discover a lien on your property, it is important to contact a lawyer who can assist you in resolving the debt as quickly as possible.
Chernoff Law handles business and real estate litigation matters throughout Arizona. Contact us by calling 480-719-7307 to discuss your legal matter.