How Can A Property Lien Affect Home Ownership?

Although liens are common in the real estate world, they're often overlooked by home-buyers because they don't understand the implications that can arise from such things on a deed. Unfortunately, the failure to anticipate and settle outstanding liens before closing can lead to delayed or derailed deals. Worse, undiscovered liens can cause years of legal problems after a sale.

What is a Lien?
A lien is a right to keep possession of property belonging to another person until a debt owed by that person is discharged. Liens on real estate are a common way for creditors to secure debts that are owed to them. A property lien is a notice attached to your title informing everyone that you owe money. In today's blog, your Lake of the Ozarks title company explains the implications of having a lien on your property.

Selling Your Property
When you have a lien on your home, you are not able to sell it. In order to sell or refinance your home, you must have a clear title. Having that lien on your title makes it unclear. To get rid of the lien, you'll need to pay the creditor what you owe. After that, the lien will be removed from the title and you'll be able to sell or refinance your home if you wish.

Foreclosing On Your Home
While a foreclosure due to a lien is rare, there is the possibility. In order to pay off the lien, creditors generally have the right to have the property sold, usually through foreclosure. In most cases however, the mortgage is placed on the home before the lien and has to be paid off before the lien. Therefore, if a creditor forecloses on the home, it has to keep up on the mortgage payments or lose the home. Instead of forcing a foreclosure, most creditors will wait until the home is sold, and the seller will use part of the purchase price to pay off the lien.

Affecting Your Credit
Having a lien on your property can negatively affect your credit. One of the factors that affects your credit score is payment history. A lien resulting from an unpaid debt would fall into this category. Liens can stay on your credit report for up to seven years. Keep in mind that your credit affects being able to get a mortgage and therefore, having a lien on your property now, could affect your ability to purchase a home in the future as well.

If you are in the market to purchase a home, it's important you make sure the title of the home you're looking to purchase is clear. By hiring a title insurance company at the Lake of the Ozarks, you can rest assured that you're protected from unexpected liens and other issues with the title. We'll do a careful search and examination of public records to ensure a clean title before your purchase of the home. At Arrowhead Title, it is our goal to minimize your risk and maximize your investment.
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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049


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