Last updated on June 6th, 2024 at 06:05 am
Understanding what Property Liens are
Property liens are a legal claim that gives a creditor or person the right to claim ownership over a debtor’s assets. The property lien serves as collateral for an outstanding debt.
What is a Property Lien: It’s legal right or interest that a creditor holds over a property owner. In this case, it might be for a debt on a property.
Typically only liens that can cause your house to go into foreclosure include these: not paying your property taxes or HOA fees
Types of Liens
Voluntary Liens: Voluntary liens are generally created via a contract among the property owner and the lien holder.
Mortgage Liens: Mortgage liens are put on a property by a mortgage lender when you get a mortgage on a home.
Involuntary liens: Unlike a voluntary lien, an involuntary lien is put on property without the permission of the owner.
Involuntary liens are generally imposed by means of law to secure the payment of a debt, this means someone wants to get money for something they feel you owe.
Examples of involuntary liens include tax liens, judgment liens, and mechanic’s liens.
Judgment Liens: A judgment lien is a legal claim place on assets usually through a judgement awarded by the courts.
Once the judgment lien is in place, the creditor becomes a lien holder and has the right to the debt if the property is sold or even refinanced.
Mechanics Liens: Filed by contractors or suppliers to secure payment from work conducted on the property.
Judgment Lien: If you’ve won a lawsuit against someone and that they owe you money, a judgment lien can be used to recover your debt.
Reasons for Putting one on a house
Remember, a lien is a claim gives the lien holder a right to the property until the debt is paid in full
Judgment Lien: If you’ve won a lawsuit against someone and that they owe you money, a judgment lien can be used to recover your debt.
By putting a lien on their stuff, you could make sure that in the event that sell or refinance the property, you may be paid what you’re owed from the proceeds.
Mechanic’s Lien: Construction contractors or subcontractors, regularly use mechanic’s liens to protect themselves when the property owner won’t pay them for work they performed on the property.
Tax Lien: A tax lien is a lien imposed by using the local authorities on a property for unpaid taxes.
When property owners fail to pay their taxes, the government has the authority to put a tax lien on the assets as a manner to recover the debt.
Tax liens may be issued by way of federal, country, or neighborhood tax authorities, and they take priority over other kinds of liens.
Steps involved in putting a lien on a property
Determine the Type of Lien: Before proceeding, you must first know the specific type of lien that can apply to you.
There are specific types of liens, such as judgment liens, tax liens, mechanics liens, or voluntary liens, as described above.
Research State Laws: Lien laws vary by state. As a result, it is critical to familiarize yourself with the specific guidelines for the state where the property is located.
File a Notice of Intent: In this case, you would begin by filing a “Notice of Intent to Lien” with the county recorder’s office where the property is located.
This will put the property owners on formal notice that you intend to place a lien on their property.
You usually will need information like the property owners name and address.
Obtain a Court Judgment: If the owner does not respond to your Notice of Intent, further steps can be taken.
The judgment states the legitimacy of your debt and presents the option of placing a lien on the property.
Record the Lien: Once your judgment is granted by the court, you may now record the lien with the county recorder’s office.
This step ensures that the lien becomes public record and will be attached to the property.
By recording the lien, you protect yourself by letting any purchasers of the property or lenders know the property has a debt attached to it.
Enforce the Lien: To enforce the lien means to take further action in collecting the money owed.
The most common example is to foreclose.
Preparing the Documentation
Once you have decided that filing a lien is the right course to collect your debt, it is time to gather the documentation.
Conduct a Title Search: A title search is necessary to gather information about the property and to whom it belongs.
This will ascertain the property owner’s identity and any extant liens or encumbrances on the property.
Draft the Notice of Intent:
Remember, this notice makes them aware of your intent to file a lien if payment is not made within a specified timeframe.
Prepare the Lien Claim: The lien claim is the legal document that creates your right to the property as a lienholder.
File Properly: There are varying filing processes.
If you do not file properly, your claim will be delayed.
Serve the Lien Documents: Serve the lien documents to all relevant parties.
Serve Notice to the Property Owner
Once you have obtained a judgment lien or another type of legal claim, the next step is to serve notice to the property owner.
Methods of Delivery: Notice can be delivered using any number of methods, including certified mail, personal delivery, or even publication.
You will have to choose a method based on your state’s laws and the circumstances of your case.
Process Server: Service of process usually means physically delivering a legal document to the property owner.
But sometimes you can mail in the paperwork.
A professional process server will follow the law when they deliver the notice.
Proof of Service: After serving notice, be sure to get proof that the owner received it.
This may be a signed acknowledgment of receipt, a notarized affidavit of service, or other method permitted by your state’s laws.
Timelines and Deadlines: There may be specific timelines and deadlines associated with serving notice.
If you fail to adhere to these timelines, you may lose your legal claim.
Communication and Follow-up: After notice is served, you will need to continue to communicate with the owner or maybe their attorney.
This allows the potential for the options of payment, negotiation, and even any disputes that you may need to hash out.
How to Stay on top of the process
Create a document system: Create a system to organize all the paperwork and documents associated with the lien.
Set reminders: Use a calendar or task management tool that enables setting reminders for dates vital to the lien.
Such dates include court dates, dates to respond to legal notice, or actions that need to be taken on a time-sensitive basis.
Check property records regularly to remain updated with all new developments or changes associated with the property.
This can include checking the county recorder’s office for any new liens or encumbrances on the property and staying updated with the property owner’s financial situation.
Stay in the Know about the Legal Proceedings: If, for some reason, it comes to a situation where the lien has to be enforced through legal action, then you must be in the know about how the case is panning out.
This may be done by attending proceedings in the court or remaining in touch with an attorney who you hired.
Resolve the lien
Most of the time, resolution is a combination of negotiation and financial strategy.
Contact the lien holder: Try to establish some open communication lines with the entity or individual.
Contact them to explain the situation and try to work out any possible remedies.
Create a repayment plan or negotiate a plan: You can create a repayment plan or negotiate one with the lien holder to recover the amount of debt that you owe to you.
In a few instances, you may consider accepting payment over a certain length of time.
Hire an attorney: If it becomes very difficult or you don’t want to deal with this anymore, you can seek counsel from an attorney.
This is typically a real estate attorney who has knowledge in, or about, the specific laws of the law.
Follow the proper procedure: You should always note that the lien laws differ from state to state.
Knowledge of your state’s laws and regulations regarding the lien is important so that you are not overwhelmed.
Ask for release of lien: You can release the lien after you have obtained payment for your outstanding lien.
This now acts as proof of satisfaction of the debt and allows you and the property owner to resolve the situation.
Final Take-aways
Understanding how to put a lien on a property is necessary for anyone seeking to protect their financial interests.
With the right legal steps, you can assure yourself that you will be paid exactly what you deserve.
If you have a lien on your property and want to sel lit fast, cash home buyers can assist you in taking care of liens on your home.
Always remember that resolving liens should be undertaken with measures and pursuant to the laws and regulation at the local levels.