Real estate transactions are undoubtedly complex and issues that occur during closing may delay or even cancel the sale of property. While there are a number of possible problems, liens are of particular concern because they cast doubt on the true nature of ownership and whether the seller has the legal right to dispose of property.
Below are four of the most common and problematic liens that can exist on a home and what you need to know should one of these liens be in place on a property in which you are interested.
Some of the most common of all property liens are those concerning unpaid taxes. Tax liens are placed on property by a governmental authority that has tax jurisdiction over the homeowner.
Local and state governments are usually granted the right to place liens on homes in an effort to collect back property taxes. Even though ranking the priority of liens often depends on which were filed first, property tax liens are often given a privileged spot by law. That means that other lienholders will be forced to wait until the taxing authority has collected back taxes due.
Another common type of unpaid tax lien is issued by the Internal Revenue Service (IRS). The IRS has power to place liens for the purpose of obtaining past-due taxes. While IRS liens aren't necessarily prioritized above other liens, they are wide in scope and can become a complicated issue if you desire to purchase a property with an active IRS lien.
Child Support and Alimony Liens
Another type of property lien that commonly appears in real estate transactions is the domestic dispute and relationship lien. This type of lien can be further subdivided into child support liens and alimony liens.
Child support liens are filed by divorced or estranged spouses in an effort to force delinquent parents into paying their share of child support payments. These liens can be particularly troubling for home buyers, since they may be forgotten once the non-custodial parent is no longer obligated to pay child support.
As a result, child support liens can often lie dormant for years, even decades, and only appear during a real estate closing. Clearing these liens can be frustrating and drag out a real estate transaction much longer than ordinarily necessary.
Alimony liens, sometimes called spousal support liens, are similar to child support loans in that they are designed to force payment of back alimony. An ex-spouse can file a lien on property owned by the individual owing alimony, and this attachment can remain for an indefinite period of time unless a filing removes it.
Property Owners Association Liens
One of the most notorious of all lien types, the property owners association or homeowners association (POA or HOA) lien, may be issued by a POA/HOA that has contractual rights to unpaid dues.
Even though the relative amounts owed may be small, POA/HOA liens are often first in line from a legal perspective. As such, POA/HOA lienholders often expect to be paid, and the existence of an unresolved POA/HOA lien can be a huge thorn in the side of property buyers.
Sometimes referred to as contractors liens, mechanics liens are often issued in an effort to force payment for services rendered. These services, when specifically applied to homes, include a variety of remodeling and repair services. For example, unpaid plumbing and electrical work performed on a home can trigger a mechanics lien against the homeowner.
While mechanics liens often expire automatically after a certain period of time, their existence can be overlooked or forgotten until the property goes through a closing transaction.
If you are interested in buying a property with outstanding liens, you will need the services of an attorney to guide you through the transaction. Even in states where attorney involvement isn't necessarily required by law, the existence of liens can become legally complex, but a real estate lawyer like Curtis Alexander McCampbell, PC can help you avoid the obstacles.Share
27 November 2017
Hello. My name is Susan James. Thank you for stopping by my website. I’m not an attorney, but I've used attorneys for a variety of reasons. One thing I have found is that it definitely pays to use an attorney who specializes in the field in which you are seeking advice or assistance. My husband and I have employed the services of a real estate attorney quite a few times. When we got married, I moved into the home that my husband owned. I also sold my house. We used an attorney to help with the sale of my house and to add me to the deed of my husband’s home. While it isn't always a legal requirement to use an attorney for these things, it is in your best interest. I’m going to share about when and why it’s a good idea to use a real estate attorney.