Types Of Property Liens

We spend a lot of time discussing how title insurance is your first defense against complications with your future home, such as unknown liens against the property. This week, we wanted to take a closer look at some examples of these types of liens and the impact they can have on your property.

The Basics of Property Liens

Essentially, a lien is a claim against your property stating that you owe a certain creditor money for an unpaid debt. By placing the lien, the creditor secures the property as collateral against the debt. If the debt ultimately remains unpaid, the creditor may seize the property as a way of repaying the loan.

Different Types of Property Liens

Some liens are voluntary; the property owners knowingly and willingly place the lien on their home in order to take out a loan. This is commonly used when homeowners take out second mortgages in order to fund home improvements, debt consolidation, or a child's college education. 

Most types of property liens are involuntary, however; the owners have liens placed against their property when they fail to make necessary payments on money they owe. These involuntary loans come in several different forms.

Child Support Liens
If you owe your ex-spouse a significant amount of money for child support or alimony, your ex may have a lien placed against your property. This lien will remain in effect until you sell/refinance or until you pay the money you owe (whichever comes first).

Tax Liens
Many creditors place liens against the property and then wait for the sale of the house to get their payments, but the government is not always as forgiving. If you owe money for back taxes or property taxes, the government can require you to sell your home prematurely so you can pay the money you owe.

Mechanic's Liens
A mechanic's lien can be placed on your property by an independent contractor who works on your home and is not paid for his services. Generally, the contractor must record the lien within six months of the services rendered in order for it to be validated.

What Does This Mean For You?

A lien is the method creditors use to ensure they will get back the money that is owed to them. When you buy a home, your title company will conduct a thorough title search in an attempt to identify any outstanding liens that may still be placed against your property. Mistakes do happen, however, so title insurance protects you against unknown liens (or other hazards) that may be attached to your property.

Unlike other forms of insurance, title insurance protects against unknown situations that have already happened. When a previously unidentified lien or other claim against your property surfaces, your title insurance policy will serve as your first line of defense.

Contact Arrowhead Title, Inc. For Your Title Insurance Needs

If you're preparing to buy property at the Lake of the Ozarks, we hope you'll keep Arrowhead Title in mind for all your Lake of the Ozarks title insurance needs. We have been proudly serving the Lake area since 1984, and we look forward to working with you!

The Lake of the Ozarks' Most Trusted Title Company


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