What Are the Different Types of Liens Creditors Can Put on Property?

 Posted on May 27,2022 in Real Estate Law

When someone applies for a mortgage to purchase a home, one of the requirements the mortgage company has is that there be no issues regarding the deed to the property. In order to ensure this, the mortgage company (or the buyer) will hire a title company to do a title search to confirm the legal ownership and to make sure there are no liens on the property.

Liens are legal claims or rights that are placed on a property by a creditor. The lien gives the creditor stake in the property if the property is sold. The problem for the property owner, however, is the property cannot be sold unless the lien is lifted.

While some liens are expected and accepted – such as the lien a mortgage company places on the property when they grant a mortgage – there are other liens that are not acceptable. The following is an overview of the different types of liens that could be found in a title search.

Home Lien

As mentioned above, when a bank or other financial institution (or even a private lender) lends a homeowner a mortgage, it will place a lien on the property for the amount of the mortgage. The lien gives the lender the legal right to foreclose on the property if the borrower fails to make mortgage payments.

Tax Lien

A tax lien is placed on a property if the owner fails to fulfill their tax debt obligation. Tax liens can be placed on a property for failure to pay property taxes, business taxes, or income taxes. Not only can the Internal Revenue Service (IRS) place a lien on a home for failure to pay federal income tax, but a lien can also be placed on a property if the owner fails to pay their Connecticut state income tax debt.

Mechanic’s Lien

Many homeowners will conduct renovations on their home and hire contractors to do the work. If the homeowner fails to pay the contractor for the work and/or materials, the contractor can file a mechanic’s lien against the property for the amount that they are owed.

There are also situations where a homeowner has a mechanic’s lien filed against them due to no fault of their own, but because the contractor they hired – and paid – fails to pay suppliers for the materials used on the job. Those suppliers can file a mechanic’s lien on the property for the amount of money owed to them.

General Judgment Lien

If a creditor files legal action against a homeowner for failure to pay and the court rules in the creditor’s favor, that creditor may be granted the right to place a lien against the property for the amount that is owed to them. This lien gives the creditor the legal right to take the property if the homeowner fails to work with the creditor to come up with a reasonable plan to pay off the debt.

Contact a Fairfield County Real Estate Lawyer for Help

Whether you are in the process of purchasing a new home or you are a property owner who has discovered that a creditor has placed a lien on your home and is threatening to take possession or preventing you from selling the property, you need a skilled Stamford, CT real estate lien attorney protecting you. Call Law Offices of Daniel P. Weiner at 203-348-5846 to schedule a free consultation.

Sources:

https://www.investopedia.com/articles/credit-loans-mortgages/090816/it-bad-have-lien-your-house.asp

https://www.cga.ct.gov/current/pub/chap_205.htm