how to find out if a property has a mortgage lien

Awhile back, I call back talking to a friend who wanted to purchase property. He was nervous—this would be his first habitation. He wanted to know how to uncover any holding liens on the home he was considering.

He didn't want any surprises—a lien gives another party a legal claim to the belongings when it'due south sold. That's why he needed to do his due diligence. Liens can hinder your ability to sell your property in the future and tin cost yous a lot of money to resolve. Learning how to perform a property lien search is an essential investor skill.

Read More:Should You Buy Properties With Back Taxes or Liens?

What Is a Lien on Property?

Before digging into the details of lien searches, it's of import to know what a lien is. These are more than simple fees. In short, a lien is a fiscal claim placed by a person or a company, which prevents you from selling the property outright until they receive their allotted payments.

There are two types of liens that can be placed against a holding. A voluntary lien is a lien the homeowner agrees to, like a mortgage. There is usually a contract involved to place the voluntary lien on the property, and it does not negatively touch on the property, its title, or the homeowner'southward ability to convey title.

An involuntary lien is typically placed on a property due to unpaid obligations like a tax pecker or a home comeback invoice, which is sometimes chosen a mechanic'due south lien. These are the liens that affect your ability to sell a belongings easily—and also are more than difficult to discharge from the public tape.

When the lien on a house is paid off, the creditor has been satisfied. They wanted payment—once they accept information technology, they tin can remove the lien. (Will they remove it? Proficient question. I hash out that more afterwards.)

While title can be conveyed without all liens being paid, nigh retail buyers volition non purchase the property without clear championship. Certainly no lender would approve the buy.

Types of liens

In that location are a number of different liens that can be placed on a holding. Common types include:

Tax liens. If yous neglect to pay your taxes, the federal, state, or local governments tin identify a lien on your property. This isn't just for property taxes—a lien tin can be placed if you neglect to payany taxes.
Mortgage lien. These mutual liens are placed on any property with a mortgage.
Mechanic's lien. Fail to pay for home improvement? Contractors have the correct to place this lien on your property, which ensures they will exist paid if yous attempt to sell or refinance.
Judgment lien. If you are party to a lawsuit, lose, and tin't pay damage, this lien tin be placed on your belongings.

Property Lien Search: How Do I Discover Out if In that location Are Any Liens on Property?

Wondering how to perform a property lien search? The answer is pretty straightforward, because liens are a affair of public tape. As long as yous know the belongings address, you tin can acquire if it's encumbered by any liens. Here are your search options:

Search the canton recorder, clerk, or assessor'south role website. All yous need is the name of the owner and/or address to admission the property records.
Visit the recorder, assessor's, or county clerk's office in person. By and large, you will find the people in these offices will be quite helpful, and they can even give you lot pointers if yous need help.
Contact a title company. Title representatives tin be extremely helpful in many ways—finding liens is 1 of them. I strongly propose having a adept title rep as part of your investing team.

How to Remove a Satisfied Lien

A voluntary lien, similar a mortgage, won't deject your championship. The seller'due south loan is paid off at the closing table, and the lien is released during the closing process.

Government holders of involuntary liens like tax or IRS liens should automatically send you a lien release in one case the debt has been paid. If yous don't receive ane inside xxx to 60 days of terminal payment, contact them to run across when you can expect to receive it.

A mechanic'due south lien holder or a child support lien holder may non be aware of their obligation to remove the lien or may exist under the impression that it will automatically be removed. Ideally, yous should make the final payment contingent upon them signing a lien release.

Lien releases must be notarized in order for the canton to have them. With a smaller lien holder, similar a contractor, consider meeting them at a bank to make the concluding payment. Have your bank notarize the lien release, then submit it to your county recorders function to take the lien removed from your property.

Prepare to start searching?Discover your local real estate public records.

Title Insurance and Property Title Search

If yous are getting a mortgage on your holding, your lender will require you to purchase a lender's title insurance policy. This protects their interests should there ever be a title dispute. A lender's policysimply protects the lender—not the owner of the property. Buyers must purchase possessor's title insurance for their own coverage.

The title insurance policy—whether it be the lender'south or owner's—only comes after a thorough title search performed by the championship company. Later on the search is performed, a policy is written. The search should turn upwards whatever liens on the property, and the insurance policy protects against most liens not found, such as undisclosed heirs, errors, or omissions in transferring deed, too as forgeries.

Title insurance is a fiddling different from most insurance policies. Other insurance policies protect you against future issues—auto insurance covers damages and losses in potential accidents, for example. Title insurance protects you lot against by instances that actually take naught to exercise with y'all personally.

Make Property Lien Search Role of Your Due Diligence

Clouds on title pop upward unexpectedly. Many times, the cloud is a surprise to the seller, especially if they skipped title insurance when they bought the holding.

Even if the sellers did purchase title insurance, it may have missed previous clouds. Computerized county records are nevertheless fairly new.

But not everyone is 100% honest all the fourth dimension. The seller is trying to sell the property, and so they may conveniently "forget" about those unpaid taxes. Trust just verify is the best grade of activeness.

A quick belongings lien search can give you the peace of heed you need. If yous notice a lien on a holding you're interested in buying, information technology might be a skillful reason to skip the purchase—or, at a minimum, rent an chaser to help you determine if the nugget can be purchased costless and clear.

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