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Do I have a lien on my property and is that bad?

On Behalf of | Nov 3, 2021 | Title Liens |

The real estate market in Texas is hot and it makes some homeowners wonder whether now is the right time to sell or buy. Part of any sale or purchase of real estate is the extinguishing of any liens on the property. The following is a brief overview of liens and how they can impact the home sales process.

Are all liens bad?

Not all liens are necessarily bad? No. Most people who own a home have a mortgage. A mortgage is a lien. It is a claim the lender has on your home should you default and fail to pay what you owe. However, mortgages are not necessarily seen as bad liens. It is simply part of the home-buying process. A mortgage lien serves as an example of an automatic lien that has nothing to do with your repayment history.

What liens can hurt homeowners looking to sell?

Liens are simply a legal claim someone has on a piece of property. Liens allow a parcel of property to be sold to pay back those who are owed funds on the property and liens can be extinguished leaving a full and clear title to sell. Some liens are better than others

Let’s take the example of a tax lien. A tax lien is placed against a piece of real property by the government should you fail to pay income taxes, business taxes or property taxes. The only way to get rid of a tax lien is to pay what you owe in delinquent taxes.

If you are in the process of building a home, and you fail to pay for work done, a mechanic’s lien may be placed on your property. This allows the entity who is owed money to be compensated if a contract has been breached. Generally, contractors will send debtors a request for payment and notice of intent before filing a mechanic’s lien.

Tax liens and mechanic’s liens are two examples of liens that represent a debt unpaid. This could potentially lead to the seizure and sale of your property, to your detriment and to the benefit of those owed money.

Ultimately, if there is a lien on your property when you are looking to sell there are ways to clear the lien so there is no longer a cloud on your title. Once you have a clean title you can move forward to sell your property for a price you see as reasonable and fit.