CHAPTER 2 What to Know About Property Liens
It’s not exactly the official legal definition; however, in practical terms, a “property lien” is an unpaid debt that could squelch your home sale. Among the most common conditions that disrupt a real estate transaction is a “lien.” In general, a lien is a legal notice that is filed in the county court in which the property is located securing an unpaid debt with a “hold” against the property. If a creditor wants to get your close attention and/or to secure the payment of the debt, it may take legal action by placing a lien on your biggest asset—your home. In real estate, liens are more common than most buyers and sellers realize. A lien can result from unpaid taxes (federal income or county/municipal property), a court judgment, or unpaid bills (e.g., utility services). Liens attach to your property and give the lien holder a security interest in that property until the debt is discharged. There are limitations regarding what you can do with a lien when one is placed on your property—for example, take out a second mortgage, sell, or refinance your property until the lien is paid off and removed by a subsequent court filing.
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