Did you know that it’s possible to have a lien on your property without your knowledge? Unfortunately, many owners first realize that such an issue exists when deciding to sell their property.  These unexpected revelations can create unanticipated and inconvenient delays, can actually affect one’s ability to sell or even cause a contract to be cancelled.

What is a Property Lien?

A property lien is a legal claim to receive money from the sale of a property. Lien amounts vary, but are equal to the amount of debt owed to the lienholder who requires the property as collateral to ensure the debt is repaid. For example, a mortgage company would be the lienholder for the amount still owed on the property’s financing loan. But in addition to these common liens, other parties may have filed additional claims against the property. If real estate taxes are not paid, a lien for these taxes may be established or if a contractor has gone unpaid for work completed on the property, a lien may be recorded.

The Effect of Liens on the Property Owner

Property owners cannot sell their property until all liens are removed and cleared. Typically, this only occurs when the debt is fully satisfied. If creditors have recorded a property lien, they must receive the amount due for the lien to be removed and the title to be cleared for sale.  A clear, unencumbered title to the property is a critical part of transferring the property to a new owner.

In some cases where required payments are not being satisfied, a creditor may elect to foreclose on the property, take title to it and resell it to recover their financial losses. When foreclosures occur, the debts are repaid in their order of priority with real estate tax arrearages coming first followed by the primary and any secondary mortgages.

How to Check for Liens

A public records search before you are ready to sell can reveal if there are any unsuspected liens on your property.  Additionally, the title company will also perform a title search as part of the sale process and, should issues surface, addressing and correcting these before selling your home is advised.

When it comes to liens, it’s definitely better to manage the problem in advance of listing your home or entertaining offers to purchase. For additional information regarding potential obstacles that can impact the sale of your home, please contact me today for a consultation. I will be happy to answer any questions you may have about the home buying or selling process, help you to find a new home or determine the value of your existing property.

 

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX of Barrington
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.  
  

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