How Does a Property Lien Affect You?

A property lien is a claim on a residential property for the homeowner's unpaid bills. When a lien is placed on a home's title, it means that the owner cannot legally sell, refinance or otherwise transfer a clear title of ownership to the home. In today's blog, your Lake of the Ozarks title company explains the implications of having a lien on your property.

Types of Property Liens
There are multiple types of liens that can affect your right to ownership of your home. A "mechanic's" or "construction" lien protects the provider of services whose charges to the owner for repairs, improvements or maintenance have gone unpaid. A lien on the property also exists when a mortgage loan is used to purchase the home. In exchange for use of the money needed to purchase the home, the lender has a legal claim on the property. A tax lien may be filed against the property by the Internal Revenue Service for unpaid federal taxes. The IRS and the county tax assessor can also place liens on property for unpaid income taxes and property taxes.

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.

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.

Ensure Your Title is Free & Clear of Liens
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.

The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!

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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049


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