Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing What is a Lien in Real Estate.
If you have previously purchased a property with a mortgage, you probably already know what a lien is. In this episode, Charles discusses what a lien is, and when it is utilized in real estate transactions.
A property lien is a legal claim against assets that can be used as collateral to repay a debt. Depending on the type of debt, liens may be attached to real property, like a home, or personal property such as a car, boat, or motorcycle. The lien allows the lienholder the ability to repossess the pledged assets if the owner defaults on paying their debt.
· For example; property tax liens are liens attached to the real property to which the tax funds are owed. A personal property lien for example would be an auto loan on a car. Judgment liens can typically be attached to either personal or real property.
· When purchasing a property, mortgage lenders will perform a title search on the property to confirm there are no outstanding liens on the property. If liens come back, they must be paid (usually paid by the seller) at or prior to closing.
· Property liens are able to be utilized in several different ways by creditors. Each jurisdiction has its own regulations and rules concerning property liens but a creditor must file and receive approval for a property lien through a city, county, or state agency.
· A lien is typically the first step a creditor will take in order to seize property. The lien notifies the property owner, the debtor, that action is being taken by the creditor.
· The Different Types of Liens
o Mortgage Lien
o Judgement Lien
o Income and Property Tax Liens
· How Do You Remove a Lien?
o Payoff: Paying off the lien is the easiest, and fastest way to have a lien removed.
o Negotiate: If you are unable to pay off the lienholder in full, you might be able to contact them to negotiate a partial payment or set up a payment plan to have the lien removed.
o Dispute: If you have discovered that a lien is not accurate, you need to provide evidence showing that the lien is invalid.
§ I sold an apartment complex a few years back, and the buyer’s attorney found a lien from the 1970s or 1980s from the city for some program where they provided money to property owners to improve properties, and the amount was minimal but I never knew about it. My attorney had to go to the city to have it removed, and/or get documentation showing it was released, to provide to the buyer’s attorney and lender.
o Whenever you pay off, negotiate, or dispute a lien; make sure to have clear documentation showing the agreement, and the payoff, and ALWAYS confirm that the lien has been removed.
o If you are planning on selling a property, I always like verifying that there are no open permits and that there are no liens (other than the mortgage). This saves a lot of possible headaches down the road when you are ready to sell to a motivated buyer, but you need to drag out closing since you are working to get the liens satisfied and open permits closed.
Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what is a lien in real estate.
Charles:
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Charles:
A property lien is a legal claim against assets that can be used as collateral to repay a debt. Depending on the type of debt, liens may be attached to real property, like a home or personal property such as a car, boat, or motorcycle. The lien allows the lien holder the ability to repossess the pledged assets if the owner defaults on paying the debt. For example, property tax liens are liens attached to the real property to which the tax funds are owed. A personal property lien, for example, would be an auto loan on a car. Judgment liens can typically be attached to either personal or or real property. When purchasing a property, mortgage, lenders will perform a title search on the property in order to confirm there are no outstanding liens on the property. If liens come back, they must be paid, usually paid by the seller at or prior to closing property. Liens are able to be utilized in several different ways by creditors.
Charles:
Each jurisdiction has its own regulations and rules concerning property liens. But a creditor must file and receive approval for property lien through a city, county, or state agency. A lien is typically the first step a creditor will take in order to see these property. The lien notifies a property owner, the debtor, and the action is being taken by the creditor. Now, the different types of liens there are mortgage, lien mechanics, lien judgment, lien income, and property tax liens. So how do you remove a lien? Well, paying off is number one. Paying off the lien is the easiest and fastest way to have a lien removed negotiate. If you’re unable to pay off the lien holder in full, you might be able to contact them to negotiate a partial payment or set up a payment plan to have the lien removed. The third way is to dispute it.
Charles:
If you have discovered that a lien is not accurate, you need to provide evidence showing that the lien is invalid. I sold an apartment complex a few years back and the buyer’s attorney found a lien from the 1970s or eighties from a city for some program where the where the city provided money to the property owners to improve properties and the amount was mineral. But I never knew about it. It never was found on file search that my lender ran when I bought the property and my attorney had to go to the city to have it removed and, and get documentation showing it was removed to provide to the buyer’s attorney and lender. Now, whenever you pay off, negotiate or dispute a lien, make sure you have clear documentation showing the agreement and the payoff, and always confirm that the lien has been removed. If you’re planning on selling a property, I always like verifying that there are no open permits and that there are no liens other than the mortgage. This saves a lot of possible headaches down the road when you are ready to sell a, a sell to a motivated buyer. But you need to drag out closing since you are working to get lean, satisfied and open permits closed. So I hope you enjoyed. Please remember to rate, review, subscribe, submit comments and potential show topics at globalinvestorspodcast.com. Look forward to two more episodes next week. See you then.
Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.
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