Last updated on January 11th, 2024 at 08:14 am

Quick Facts:

  •  In the United States, the most common type of lien is a mortgage lien, which is placed on a property when the owner takes out a loan to purchase it. 
  • The average amount of a mortgage lien in the U.S. is $200,000. 
  • Nationwide, around 18% of all residential properties are affected by a lien at any given time.

Understanding Property Liens

Property liens are legal claims that give a creditor the right to assert ownership over a debtor’s property as collateral for an outstanding debt.

It is important to have a thorough understanding of how property liens work, as they can significantly impact both property owners and creditors. 

Typically only liens that can cause your house to go into foreclosure include not paying your property taxes or HOA fees.

What is a Property Lien Definition: A legal right or interest that a creditor holds over a property as security for a debt owed by the property owner.

Importance of: By understanding property liens, you can protect your own property from being seized or encumbered, or you can assert a lien against someone else’s property to secure payment.

how do liens work

Differnt Types of Liens

A voluntary lien is a lien that is created with the consent and agreement of the property owner.

For example, when someone takes out a mortgage loan to purchase a property, the lender places a voluntary lien on the property as a security interest until the loan is fully repaid.

Voluntary liens are typically created through a contractual agreement between the property owner and the lien holder.

Mortgage Liens: Placed on a property by a mortgage lender as security for a mortgage loan.

Auto Loan Liens: Placed on a vehicle by a lender until the loan is fully repaid.

In contrast to a voluntary lien, an involuntary lien is placed on a property without the consent or agreement of the property owner.

Involuntary liens are typically imposed by law to secure the payment of debts or obligations.

Examples of involuntary liens include tax liens, judgement liens, and mechanic’s liens.

Judgment Liens: A judgment lien is a legal claim placed on a property by a creditor to secure the payment of a debt owed by the property owner.

This type of lien is typically obtained through a court-awarded judgment after a lawsuit or legal action has taken place.

Once the judgment lien is in place, the creditor becomes a lien holder and has the right to collect the debt from the proceeds if the property is sold.

Mechanics Liens: Filed by contractors or suppliers to secure payment for construction or improvement work done on a property.

Reasons for Putting one on a house

Rememer, a lien is a legal claim that gives the lien holder a right to the property as collateral until a debt is paid off.

But what are the reasons for putting a lien on a property?

Let’s explore a few scenarios where individuals or organizations might consider taking this legal action.

Judgment Lien: If you have won a lawsuit against someone and they owe you money, a judgment lien can be used to secure the debt.

By putting a lien on their property, you can ensure that if they sell or refinance the property, you will be paid what you’re owed from the proceeds.

Mechanic’s Lien: Construction professionals, such as contractors or subcontractors, often use mechanic’s liens to protect themselves against non-payment for labor and materials provided.

This type of lien allows them to encumber the property where work was performed until they are compensated.

Tax Lien: A tax lien is a lien imposed by the government on a property for unpaid taxes. 

When property owners fail to pay their property taxes, the government has the authority to place a tax lien on the property as a way to secure the payment of the outstanding taxes.

Tax liens can be issued by federal, state, or local tax authorities, and they take priority over other types of liens.

Steps involved in putting a lien on a property

Putting a lien on a property is a legal process that allows you to claim a debt owed to you by the property owner.

This can be an effective way to ensure that you get paid what you’re owed, especially when other collection methods have failed. 

Determine the Type of Lien: Before proceeding, it’s important to identify the specific type of lien that applies to your situation.

There are different types of liens, such as judgment liens, tax liens, mechanics liens, or voluntary liens as discussed earlier.

Each type has its own requirements and procedures, so it’s essential to know the right path to follow.

Research State Laws: Lien laws vary from state to state, so it’s crucial to familiarize yourself with the specific regulations in the state where the property is located.

File a Notice of Intent: The first step in the process is to file a “Notice of Intent to Lien” with the appropriate county recorder’s office or local courthouse in the jurisdiction where the property is situated.

This notice serves as a formal declaration of your intention to place a lien on the property and typically includes information such as the property owner’s name, the amount owed, and a description of the debt or services provided.

Obtain a Court Judgment: If the property owner fails to address the debt after receiving the Notice of Intent, you may need to take legal action.

This involves filing a lawsuit against the property owner to obtain a court judgment in your favor.

The judgment confirms the validity of your debt and grants you the legal right to place a lien on the property.

Record the Lien: Once a court judgment has been obtained, you can officially record the lien with the county recorder’s office or other designated authority.

This step ensures that the lien becomes a matter of public record and attaches to the property.

Recording the lien protects your interests by signaling to potential buyers or lenders that there is an outstanding debt tied to the property.

Enforce the Lien: Enforcing the lien involves taking further legal action to collect the debt owed to you. This may include initiating a foreclosure process or working with a debt collection agency.

Prepare the Documentation

Once you have determined that filing a lien is the appropriate course of action to ensure you receive the payment owed to you, it’s time to gather the necessary documentation. 

Conduct a Title Search: A title search is necessary to gather information about the property and its ownership.

This search will help you confirm the property owner’s identity and any existing liens or encumbrances on the property.

Draft the Notice of Intent: In many jurisdictions, before you can file a lien, you must first send a notice of intent to the property owner.

This notice informs them of your intention to file a lien if payment is not made within a certain timeframe. 

Prepare the Lien Claim: The lien claim is the official document that establishes your legal right to the property as a lien holder.

It should include detailed information, such as the property owner’s name, a description of the work done or services provided, the amount owed, and any relevant dates. 

Follow Proper Filing Procedures: Filing procedures may vary depending on your jurisdiction.

Some states require you to file the lien claim with the county recorder’s office, while others may have specific forms to fill out or additional steps to complete. 

Serve the Lien Documents: Serve the lien documents to all relevant parties involved, including the property owner, any contractors or subcontractors, and other parties with an interest in the property.

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. 

Delivery Methods: Notice can be served through various methods, such as certified mail, personal delivery, or publication. 

The method you choose will depend on your state’s laws and the circumstances of the case. 

Hire a Process Server: Serving notice typically involves delivering a legal document to the property owner. But sometime you can mail the paperwork.

Hiring a professional process server can ensure that the notice is served in accordance with legal requirements. 

Proof of Service: After serving notice, it is essential to obtain proof that the property owner received the notice.

This can be achieved through a signed acknowledgment of receipt, a notarized affidavit of service, or other means accepted by your state’s laws. 

Timelines and Deadlines: In some cases, there may be specific timelines and deadlines associated with serving notice.

Failure to adhere to these timelines can jeopardize your legal claim. 

Follow-up and Communication: After serving notice, it is crucial to maintain open lines of communication with the property owner.

This allows for discussions regarding payment options, negotiations, or the resolution of any disputes that may arise. 

Monitor the Lien

Create a Document System: Develop a system to organize all the paperwork and documents related to the lien. 

Set Reminders: Use a calendar or a task management tool to set reminders for important dates related to the lien. This can include court dates, deadlines for responding to legal notices, or any other time-sensitive actions that need to be taken.

Regularly Check Property Records: Keep an eye on the property records to stay informed about any changes or developments regarding the property.

This can include checking the county recorder’s office for any new liens or encumbrances on the property, as well as staying updated on the property owner’s financial situation. 

Stay Informed about Legal Proceedings: If legal action becomes necessary to enforce the lien, it is essential to stay informed about the progress of the case.

This may involve attending court hearings or staying in touch with your attorney if you have hired one. 

Resolving the it

Resolving a lien typically requires a combination of legal procedures, negotiations, and financial arrangements. 

Communicate with the lien holder: Establish open lines of communication with the entity or individual holding the lien. Reach out to them to discuss the situation and explore potential solutions. 

Negotiate a payment plan: Consider negotiating a payment plan with the lien holder to satisfy the outstanding debt.

In some cases, they may be open to spreading the payments over a designated period of time. 

Seek legal advice if necessary: If the process becomes complex or you encounter any legal hurdles, it’s advisable to seek legal advice from an attorney specializing in real estate or debt collection. 

Follow state-specific procedures: Keep in mind that lien resolution procedures may vary from state to state.

Familiarize yourself with your state’s laws and regulations pertaining to liens to ensure compliance. 

Request a release of the lien: Once you have fulfilled the obligations outlined in the negotiated agreement, request a release of the lien from the lien holder.

This release serves as proof that the debt has been satisfied and allows you to move forward without the encumbrance of the lien on your property

Final Take-aways

Understanding how to put a lien on a property is crucial for anyone seeking to protect their financial interests.

By following the proper legal steps, you can ensure that you are paid what you are owed. Cash home buyers can help you resolve liens on your home.

It is essential to remember that putting a lien on a property should always be approached with caution and in compliance with local laws and regulations.