What exactly is a property lien and how does it work?
Your Albuquerque home already has a lien if you have a mortgage. That is something that many people are not aware of. Your property belongs to the bank if you default on the loan.
Obviously that’s normal. What about other types of house liens?
A lien is a claim made by a creditor against your property. It’s possible for someone to collect money owed to them when they have a lien on your property. Unpaid obligations could result in a lienholder seizing your property and selling it.
Not only can lienes be placed against homes and cars, but they can also be removed.
What does all this mean?
What Types of House Liens Are There?
Homeowners may be subject to various types of liens. You can think of a home lien as a creditor’s claim on your property. General liens are also possible. Your bank accounts, among other assets, might be legally seized by a creditor in this situation.
Involuntary or voluntary liens are both possible. Your mortgage is an example of a voluntary lien. When you default on a financial obligation, a creditor can impose an involuntary lien as part of their legal remedies.
Contractors, government agencies, or other types of creditors can place liens.
The government can also place liens on a person’s property to enforce payment of income, business or property taxes.
When a court rules in favor of a creditor, a general judgment lien is granted to them.
There is also a specific type of lien known as a mechanic’s lien. Mechanic’s liens are filed when the property owner fails to pay for work or supplies. It is also sometimes called a construction lien or property lien.
How Can a Lien Affect You as a Homeowner?
An involuntary lien is the result of unpaid debt leading to legal action. The existence of a lien does not necessarily mean a property’s title has been transferred, but it may happen eventually.
If there’s a lien on your property, there are a few possible outcomes. A seizure and sale of the property is possible. In rare cases, this may occur if you owe unpaid property taxes. Lienholders usually try to avoid foreclosure. It is much more preferable to settle the debt with the homeowner or have the homeowner sell the property themselves.
A property lien may have to be paid in full before the home can be sold or financed if you do not pay it and settle your obligations. Creditors may also force a property sale. The lien might need to be paid before you can receive any proceeds from the sale of your home if it is foreclosed.
Removing a Lien
A lien on your home can affect you in a number of ways. This could prevent you from selling the property, or even force you to sell it.
In order to remove a lien, it is best to settle the debt. You might be able to negotiate a settlement with the lienholder. The lien might be removed if you can agree to a payment plan with the creditor.
When a lien is paid off, you can then file a Release of Lien.
A home with an existing lien isn’t common because most sellers try to resolve the issue prior to listing their property. A buyer is unlikely to be able to finance an attached lien, even if they were able to accept a lien on the title. An exception could be if you purchased a home through an auction or foreclosure, in which case an attached lien might become your responsibility.
A title company or attorney will ensure that there are no liens on a home during the title search phase.
The best thing to do if you have an involuntary lien is to pay off the debt. Otherwise, the property could be seized or foreclosed.
Make sure to join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates. Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Contact us today to help you buy or sell your next home in Albuquerque.
HOT HOME LISTING OF THE WEEK!
2 Homesteads Road, Placitas, NM 87043
$525,000
Welcome home to this exceptional custom pueblo contemporary, situated in a convenient Placitas location w/stunning views! Splash in the sparkling Gunite pool w/automatic cover while enjoying an unobstructed view of the Sandia’s! Offering an open & bright split bedroom floorplan with fine appointments throughout including raised wood beam accent ceilings; beautiful wood look tile floors; glass wall 4 panel sliding patio door; floor to ceiling tile surround fireplace in FR; subway tile & stacked stone accents; refrig air; Elastomeric roof; & more. Inspiring chef’s kitchen w/quartz countertops; SS appliances; kitchen island; eat at bar; & sunny nook. Enjoy mtn views from private Owner’s Suite w/Spa like en suite, access to pool & courtyard. Short distance to restaurants, store, & Hwy 165.
Contact the Sandi Pressley team for additional details!
Get your Morning Inspiration with the Sandi Pressley Team
