If you’re like most people, you’ve heard of a property lien – but what is it, and what does it have to do with real estate?
Here’s what you need to know.
What is a Property Lien?
Property liens are some of the most common issues homebuyers encounter – and they can trip up a sale.
A lien is a legal notice that the local government keeps on file as a result of an unpaid debt. For example, if a homeowner owes a contractor money and doesn’t pay his or her bills, the contractor can put a lien on the house.
The major types of liens include:
- Mechanic’s liens. These liens are usually initiated by contractors, such as carpenters, painters and other repair companies. Often, these people put a lien on a house to make sure they’re paid – and once they receive their money, they cancel the lien.
- Judgment liens. Homeowners who lose court cases and get a judgment against them may have a lien placed against their home.
- Tax liens. People who fail to pay federal, state or county taxes may have a lien placed against their home by the government.
When you’re trying to buy a home and you find out that there’s a lien against it, you need to proceed with caution. If you knowingly buy a home with a lien against it, you become responsible for the lien.
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