Property Liens

A property lien is a legal claim that can tie up your real estate, block a sale, or lead to foreclosure if left unresolved. Whether you are buying, selling, or inheriting property, understanding how liens work, what types exist, how they affect ownership, and how they are removed is essential for making informed decisions.

What is a Lien on Property

A lien on property is a legal claim a creditor places on real estate or property to secure payment of a debt or obligation. A lien does not transfer ownership, but it attaches to the property's title and can limit the owner's ability to sell, refinance, or obtain clear title until the underlying debt is satisfied or the lien is otherwise resolved.

Liens are typically recorded in the public land records of the county where the property is located and can be placed by lenders, government agencies, contractors, or courts.

Types of Property Liens

There are different types of property liens, each serving different purposes. Property lien types include:

Mortgage Liens: A mortgage lien is a voluntary lien placed when a borrower uses a loan to purchase a home. The lender holds this lien as security until the loan is fully paid. If the borrower defaults, the lender can foreclose.
Property Tax Liens: Local governments can place a lien on a property for unpaid property taxes. Tax liens often take priority over all other claims and can lead to a tax sale if not cleared.
Judgment Liens: When a creditor sues and wins a money judgment in court, they can file a judgment lien against the debtor's real estate. This ensures they may collect if the property is sold or refinanced.
HOA Liens: Homeowners Associations (HOAs) can place a lien for unpaid dues, assessments, or fines. Some states allow HOAs to foreclose on a property based on these liens.
Mechanic Liens: Also known as construction or contractor liens, these are filed by workers or suppliers who performed labor or provided materials but were not paid. They must typically be filed within a specific timeframe after work is completed.
IRS or State Tax Liens: Federal and state governments can place a lien for unpaid income taxes. These liens apply to all property owned by the taxpayer and must be resolved to sell or refinance real estate.

Voluntary vs. Involuntary Liens

Liens may be voluntary or involuntary. Voluntary liens are agreed to by the property owner, such as mortgage liens, deeds of trust, or home equity loans. These liens are part of a contractual agreement. On the other hand, involuntary liens are imposed without consent, typically due to unpaid debts or legal action. Examples of involuntary liens include tax liens, mechanic liens, and judgment liens.

How Liens Affect Ownership and Sale

Liens can affect ownership and sale of a property in the following ways:

Clear title is obstructed: Most buyers and lenders require title free of undisclosed liens. A recorded lien shows up in title searches and must be resolved before closing.
Sale proceeds may be used to pay liens: At closing, outstanding liens are typically paid from sale proceeds according to lien priority to deliver clear title to the buyer.
Refinancing is hindered: Lenders demand payoff of superior liens before issuing new loans or may insist on subordinating agreements.
Marketability and price impact: Visible liens reduce buyer confidence and can lower sale price or lengthen the time to sell.
Encumbrance remains if unresolved: If a lien survives closing because it was not discovered, it can later be enforced against the property or new owner in many jurisdictions.

Lien Priority Importance

When multiple creditors claim the same property, the order of priority decides the distribution of limited sale proceeds. This order is especially important during foreclosure, where the proceeds from the sale may not cover all debts. Also, lower-priority lienholders may receive nothing.

Typical lien priority follows this order:

Property tax liens
Mortgage liens (based on recording date)
HOA liens (priority depends on state law)
Mechanic's liens (this may take precedence over mortgage liens in some cases)
Judgment liens

How Liens Relate to Foreclosure

A lienholder with foreclosure rights, typically a mortgage lender or tax authority, can initiate judicial or nonjudicial foreclosure to recover debt by selling the property.

Superior lienholders are typically the first to foreclose or to be paid from the proceeds of a foreclosure sale. If foreclosure proceeds do not cover the debt, the lender may seek a deficiency judgment against the borrower personally in some states.

Note that foreclosure can transfer title, cloud credit, and leave residual liabilities.

How Liens Are Removed

Removing a lien typically requires one of the following:

Paying the debt: Once satisfied, the lienholder must file a lien release with the county.
Settling or negotiating: Some creditors may accept less than the full amount owed.
Disputing the lien: If a lien is invalid or fraudulent, the owner can challenge it in court.
Bonding off the lien: Some states, such as Washington, New York, Connecticut, and Texas, allow posting a surety bond to remove a lien from the title temporarily or permanently so the property can be sold or refinanced.
Expiration: Some liens expire after a statutory period if not enforced.
Discharge in bankruptcy: Filing bankruptcy can discharge underlying personal liability and, in limited circumstances, clear unsecured claims. However, secured liens generally survive unless avoided under bankruptcy statutes.

Common Lien-Related Questions

The following are frequently asked property lien questions.

Can a lien be placed without my knowledge?

Yes, especially involuntary liens like mechanics' or tax liens.

Can I sell my house with a lien on it?

Yes, but the lien must be resolved before or at closing. The title company will ensure any outstanding liens are paid from the sale proceeds.

Can I refinance if there's a lien?

Possibly, but lenders require superior liens to be paid or subordinated. Junior liens complicate refinancing and may require payoff or agreement from lienholders.

How long does a lien stay on the property?

It depends. Some liens remain until paid and released; judgments may expire under state statutes of limitation unless revived; statutory periods for enforcement vary by lien type and jurisdiction.

What if I paid the debt but the lien wasn't released?

You should demand a written lien release or satisfaction from the lienholder, then record it with the county. If the lienholder refuses, you may need legal action to compel release and clear title.

Do liens affect heirs after death?

Yes. Liens generally attach to property regardless of ownership changes. Executors or heirs may need to pay or settle liens during probate or before transfer.

Are liens public record?

Yes. Most property liens are recorded with the county recorder or land records office and are searchable by the public.

Do liens affect my credit score?

Judgment liens can impact your credit. However, tax and mechanic's liens typically no longer appear on consumer credit reports since 2018 changes to credit reporting practices.

How do I know if there's a lien on a property?

You can check with the county recorder's office, hire a title company, or use some online public records search portals.