Property liens aren't uncommon, but they are a bit of a hassle. A lien can block the sale of a piece of property. Learning who holds that lien is the first step in getting it settled. Lienholders can be any entity from a construction contractor to the federal government.
In essence, the presence of a lien signals unpaid debt by the property owner. If you are the purchaser, you want to know about any legal impediment to buying the land. Knowing about a lien could be the red flag that tells you to look elsewhere. Oil and gas exploration companies are interested in learning about liens against property, often requiring title searches on multiple parcels.
If you are a seller, the presence of a lien may be a surprise, albeit unpleasant. Sometimes a property owner is unaware of a mechanic's lien or a child support lien. A lien must be both satisfied and released before a lender will provide a mortgage or the property can be sold. To do that, you need to find the lien holder.
Finding the Lien Holder(s)
Finding the lien against a single property is relatively simple. The easiest way is to look online. Property records are public and, these days can be found by a computer search. If you don't have the name and address of the current property owner, you might have trouble learning about anything online. In that case, a visit to the local tax assessor’s office or the county courthouse may be your next step. The staff can help you locate the records.
Title companies and bank attorneys perform title searches, which will uncover liens for you.
Find the lien, and you will find the lien holder.
Searching for One Property
You have an option outside of title companies and bank attorneys if you need someone to perform a document search.
CourthouseDirect.com offers a document research service. All you need to do is provide a research request to get a quote. Our searches uncover information about the following types of records, including some state and federal documents:
- Lien records
- Mortgage records
- Probate records
- Assumed name record
- Judgment records
- Mechanic's lien records
- Builder's lien records
There are other records available as well.
Deed and Lien Run Sheets
Deed and lien run sheets are designed for an audience that includes:
- Title Companies and Agents
- Government Entities
- Banks and Lending Institutions
- Document Retrievers
- Oil & Gas Landmen
- Private Investigators
- Right of Way Agents
- Real Estate Agents
Each of these professionals has reason to learn about multiple properties. To save time, they can order a run sheet that includes only those properties they are interested in.
Deed and lien run sheets provide you with everything you need to know about a property, including the presence of a lien. The run sheet is put together by experienced title abstractors and can be ready in 24 hours or less.
A run sheet shows the grantor and grantee for each document and a tag labeling the document type. In some cases, a link to an image of the original document is included. If you need to look at an original lien release, you may find the link on the run sheet.
Types of Liens
Liens come in several different flavors.
- First mortgage
- Second and third mortgages
- Judgment lien
- Mechanic’s lien
- HOA (Homeowners Association) and COA (Condo Owners Association) liens
- Tax liens
Mortgage liens are the most common and aren’t the bad news most liens are. The presence of a mortgage lien just means the owner borrowed from a lender to purchase the property and is in the process of paying it back. Your purchase of the property allows the owner to do that.
A second mortgage is taken out by a borrower who needs a second loan to buy or continue to pay on a home. For example, the first mortgage may have covered 80% of the purchase price. The buyer may need a second mortgage to pay the other 20%.
Third mortgages are sometimes home equity lines of credit. A homeowner leverages the equity in the home to obtain a loan using the house as collateral.
Judgment liens are the result of a legal suit against a property owner for a debt. If the owner loses, a judgment lien may be placed on the property as collateral to ensure debt repayment.
Mechanic’s liens are placed when a contractor, subcontractor, or laborer is not paid for work done on the property. An unpaid material provider may also record a mechanic’s lien.
HOAs and COAs may turn to recording a lien against the property of a home or condo owner who has not paid the annual dues.
A tax lien is just what it sounds like. The owner has tax debts to pay, and the IRS or a state or local tax agency recorded a lien to guarantee payment.
Liens are prioritized in the order they are filed at the county clerk's office. Kind of a first-come-first-served. Any lien payments go to satisfying the first lien on record, then it works its way down the list.
Since the first lien recorded is typically the mortgage, the other lien holders must wait until the mortgage is paid before receiving any money. They are designated junior lien holders.
There are exceptions to that rule. State laws differ, but some liens can be placed ahead of others. Unsurprisingly, tax liens often go to the head of the line. Sometimes a special assessment tax can sneak in ahead of the other liens. HOA/COA and mechanic’s liens can also take priority over other recorded liens.
In cases of a second mortgage, again depending on state law, the second mortgage lender might sue to recover the amount owed in a move called a deficiency judgment.
Finding out that there is a lien against property you want to sell can be an unpleasant surprise. Before you can move on, you need to get the lien released. However, you need to know who owns the lien. Finding the lienholder is the first step in satisfying and obtaining the release of the lien.