Property Lien Search: How to Find Out About a Lien on a House

7

Recently, I was talking to a friend who was looking at purchasing a piece of property. He was nervous because it was going to be his first home, and he asked me about finding out about a lien on a house and doing a property lien search.

His concern for liens against his property is valid — liens can hinder your ability to sell your property in the future and can cost you a lot of money to resolve.

Property Lien Search: How Do I Find Out if There Are Any Liens on a Property?

Wondering how to perform a property lien search? The answer is pretty straight forward. Liens are a matter of public record once recorded. To find if there are any liens, here are your options:

  • Search the county recorder, clerk, or assessor’s office online. All you need is the name of the property owner or its address. If your county does not have the data online, then:
  • Visit the county recorder, clerk, or assessor’s office in person. Generally, you will find the people in these offices will be quite helpful, and they can even give you pointers if you need help.
  • Contact a title company. Title representatives can be extremely helpful in many ways — finding liens is one of them. I strongly advise having a good title rep as part of your investing team!

what-is-a-lien-on-a-house

What is a Lien on a House?

A lien on a house is a legal claim against your property. It gives creditors a stake in your home and a way to collect debts owed to them.

There are two types of liens that can be placed against a property. A voluntary lien is a lien the homeowner agrees to — like a mortgage. There is usually a contract involved to place the voluntary lien on the property, and it does not negatively affect the property, its title, or the homeowner’s ability to convey title.

An involuntary lien is typically placed on a property due to unpaid obligations like a tax bill or a home improvement invoice, sometimes called a mechanic’s lien. These are the liens that affect your ability to sell a property easily — and also the more difficult to discharge from the public record.

When the lien on a house is paid off, the creditor has been satisfied. Their primary objective was to get paid, and once that is done, removing the lien may or may not be on their radar.

While title can be conveyed without all liens being paid, most retail buyers will not purchase the property without clear title. Certainly no lender would approve the purchase.

How to Remove a Satisfied Lien

A voluntary lien on a house — like a mortgage — isn’t a cloud on title. The seller’s loan is paid off at the closing table, and the lien is released during the closing process.

Government holders of involuntary liens like tax or IRS liens should automatically send you a lien release once the debt has been paid. If you don’t receive one within 30-60 days of final payment, contact them to see when you can expect to receive it.

A mechanic’s lien holder or a child support lien holder may not be aware of their obligation to remove the lien or may be under the impression that it will automatically be removed. The best chance of having a lien release signed is before the final installment has been paid — that is, make the final installment contingent upon them signing a lien release.

Lien releases must be notarized in order for the county to accept them. With a smaller lien holder, meeting them at a bank to make the final payment will be easier than if you were dealing with a larger lien holder. Have your bank’s notarize the lien release, then make sure to submit to your county recorders office to have the lien removed from your property.

Title Insurance

If you are getting a mortgage on your property, your lender will require you to purchase a lender’s title insurance policy, which protects their interests in the property should there ever be a dispute in the title. It is important to note that a lender’s policy ONLY protects the lender — the owner of the property is not protected. In order for an owner to be covered, they must purchase an owner’s title insurance policy.

The title insurance policy, lender’s or owner’s, only comes after a thorough title search performed by the title company. After the search is performed, a policy is written. The search should turn up any liens on the property, and the insurance policy protects against most liens not found, such as undisclosed heirs, errors, or omissions in transferring deed, as well as forgeries.

Title insurance is a little different from most insurance policies. Other types of insurance policies are purchased to protect you against future issues — you buy auto insurance to cover damages and losses in potential accidents. Title insurance protects you against past instances that actually have nothing to do with you personally.

are-liens-public-record

Make Property Lien Search Part of Your Due Diligence

Clouds on title pop up unexpectedly. Many times, the cloud is a surprise to the seller — they may not have purchased title insurance when they bought the property.

Depending on when the home was purchased, previous clouds could be missed even if the sellers did purchase title insurance when they bought the home — computerized county records are still fairly new.

But not everyone is 100% honest all the time. The seller is trying to sell the property, so they may conveniently “forget” about those unpaid taxes. Trust but verify is the best course of action.

A quick property lien search can give you the peace of mind you need.

Have you performed a property lien search? What did that search tell you?

Let me know your comments and questions below!

About Author

Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) is the founder and CEO of BiggerPockets.

7 Comments

  1. Randy Phillips

    A very informative article. I’ve had liens screw up a few of my deals. On one property the liens were many years old from family members that had since passed away. The Title company suggested the seller get a bond, some kind of insurance that will pay out in case a heir makes a future claim.
    However the bonding company required the seller to have some decent credit, which they didn’t. I finally gave up on that property.
    Some liens are paid out of the sellers proceeds and some the buyer will pay or I agree to pay if seller is unwilling and their is enuf profit in the deal.
    Finding them is not a problem, they always turn up when the Title company does their Pre-Lim search.
    When I do find a great property, it’s a great feeling when no liens turn up.
    Let’s make some Money…
    Rando

  2. Katie Rogers

    Even if you search the county recorder, clerk, or assessor’s office online, you should probably also go in person. Their online system has substantially less info than the computer in their brick-and-mortar place. Online at home is great for a first pass. Remember, too that even counties with online capability often have only the past thirty years or less available. You may need to search further back.

  3. Katie is right, in some counties you have to go to the register of deeds or clerks office for judgements. I suggest getting a professional if you are not sure, and if you do several a year you can work out a volume price with a local attorney. If you only buy through mortgage lenders that is one thing but if your paying cash or have a private lender you must be aware.

  4. jason krejci

    As part of my job with the IRS I spend a lot of time at courthouses. As Katie said some counties will have info online and some will not. Some counties I work don’t even have the info digitally at all. I have found the best thing to do if you are not sure how to complete your search is to ask an employee at the recorder/register of deeds. They know all the little tips and tricks and I have had great luck getting help when I need be. It isn’t uncommon for even title companies to make a mistake. Just make sure you follow the chain of title by doing a search on the piece of property itself as well as a name search for any individuals who have had an interest in the property. Also search variations of the name such as searching John Doe as well as J Doe.

    • Katie Rogers

      You are right. You would be amazed at the number of possible variations on a SINGLE name and they all turn out to be the same person. In California you have to be especially careful because of Hispanic names. The person might record under mother’s surname, or father’s surname, or both with a hyphen, or both without a hyphen, or both reversed, hyphen or not, never mind initials and abbreviations.

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here

css.php