A lien is a legal claim or right over property or other assets that can be used as collateral to repay a debt to a creditor. This means that the creditor can levy the right to sell your home if the debt a person (the owner) has incurred is not paid off.
Property liens on real estate typically prevent the owner from selling the home until the debt is settled and the lien is removed.
The most common liens on a property are mechanic’s liens, tax liens, mortgage liens, and municipal liens, which are placed on a home when the owner doesn’t pay their bills.
A judgment lien is a type of lien that arises from a court judgment. When a creditor wins a lawsuit against a debtor, the court may issue a judgment in favor of the creditor for the amount owed, plus any interest or penalties. If the debtor does not pay the judgment, the creditor may seek to place a judgment lien on the debtor’s home or property.
Like other liens, a judgment lien is a claim a creditor has over a debtor’s property.
Liens can last anywhere from 90 days to over 20 years. How long a lien will stay on your property depends on several things, including the type of lien and state laws.
Mechanics liens will usually last between 90 days and a year before they expire. Tax liens can stay on your record for up to 10 years or more. Judgment liens will typically stay on your property for between 10 and 20 years, depending on your state’s laws.
Liens can also be extended if the person or group owed the money takes additional court actions.
Let’s say that you buy a property with a lien on it, but you get it at a public auction. The owner ended up having a foreclosure on the property. This means you don’t have to pay off the liens, right? Not quite. If you buy the property, you could still be responsible for those debts.
If you have a home foreclosed due to taxes owed, you will see most other liens disappear—including first mortgages, judgment liens, and junior liens. However, if the home was foreclosed from one lien and other liens still existed, you may still find them attached to the property despite the foreclosure.
In general, judgment liens and mechanic's liens are almost always extinguished by foreclosure, but tax liens and municipal liens may not always be.
It’s important to realize that extinguishing a lien doesn’t mean the debt goes away. Debt collectors can still sue you for the money, even if the lien is gone. This can cause you to be foreclosed upon yet again after a lien.
If you just bought a foreclosed home, a lienholder might be open to forgiving the debt incurred by the previous owner. However, this is up to the lienholder to decide. If they don’t want to forgive you, they don’t have to.
- Pay it Off
- Negotiate With the Lienholder
- Let is Expire
1. Pay it Off
The simplest way to get rid of a lien is to pay it off. Once you settle the debt, you will need to ask for a lien waiver to get rid of the lien.
2. Negotiate With the Lienholder
If you don’t feel like you want to or cannot pay off the lien in full, you can always try to negotiate with your lienholder. For example, if you just bought the property or are undergoing extreme duress, you might be able to make a case for lien removal or at least negotiate a reduced payment.
3. Let it Expire
The last way to get rid of a lien is to let it expire or time out. This won’t work for most types of liens as they can easily be renewed, but it can be an option for mechanic’s liens.
1. Make sure that the lien is legitimate
The first thing you want to do before paying off a lien and removing it is to confirm that it's legitimate. If it should have been extinguished or doesn't look legitimate, you can go to court to challenge it and have it removed via a court order. However, if you confirm it's legit, you'll need to pay it.
2. Pay off the debt associated with the lien
The next step in getting a lien removed is paying it. You need to pay off and remove the debt in order to get rid of the lien. If you have an attorney, they can try to negotiate a lower payment.
3. Fill out a release of lien form
Once you've settled the debt, you'll need to complete a release of lien form. If you don’t fill this out, the lien will remain in place even if you pay off the debt.
4. Have the lien holder complete the release form
The lien holder will also need to complete the lien release form. They need to agree to sign it in front of a notary public for the lien to be removed. If they don’t agree, hiring a lawyer to protect your rights can help.
5. File the release form and ask for a lien waiver
While you need to file the form in order for the lien to be removed, a waiver isn’t always necessary. However, it’s a good thing to have since it proves that you paid off all the debts and that the lien has been effectively lifted. Like with almost all important filings, make sure you keep your paperwork for future reference.
How fast you get rid of the lien hinges on how fast you can get all the paperwork filed. Once you have your lien paperwork filed, you will be able to get confirmation of the lien’s removal within seven business days.
However, it’s hard to peg a full-time range that you can expect to stay within when it comes to liens. Tax liens and mortgage liens, for example, have longer time ranges than something along the lines of a mechanic’s lien.
One can expect the lien to be removed anywhere from two weeks to two months from the first time you start working towards its removal. Sometimes, it can take even longer. If you aren’t sure if the timeframe will work with your goals, talking to a lawyer can help.
There’s a good reason why realtors and title agents balk when they hear someone say anything about a property lien. Liens are notably hard to deal with, often trigger serious financial problems for anyone buying a property, and can also be a nightmare to remove.
When it comes to matters involving liens, there’s a general belief that it’s best to let the buyer beware. But many buyers will avoid buying a property that has a lien altogether. So even if you love the way the home looks, it’s best to make sure that you don’t try to buy it until you’re sure that the title is clean.