Demystifying Home Liens: Everything You Need to Know About Property Encumbrances


A home lien, a legal claim on a property, is crucial for securing mortgage loans but can be a complex subject. In this comprehensive guide, we explore the various aspects of home liens, from understanding their types and implications to checking for them and handling potential issues. You’ll also find a detailed pros and cons section, FAQs, and key takeaways to help you navigate the world of home liens effectively.

Understanding home liens

Buying a home is a significant milestone in many people’s lives. For most, it involves securing a mortgage, a substantial financial commitment that makes homeownership possible. However, when you take out a mortgage, your lender obtains a legal claim on your property, known as a home lien. This claim serves as collateral to secure the loan, giving the lender a legal right to your property if you default on your payments.
Home liens play a vital role in the real estate and lending industries, but they can be complex and potentially impact your ability to buy, sell, or refinance a home. In this comprehensive guide, we’ll demystify home liens, covering everything you need to know about these legal encumbrances.
A home lien, also referred to simply as a lien, is a legal claim placed on a residential property. This claim serves as collateral, ensuring that a lender receives repayment for a mortgage loan. When a home lien is placed on a property, it becomes part of the public record in the county where the property is located.

Types of home liens

Home liens come in various forms, each with its own characteristics and implications:

Tax lien

A tax lien is imposed on a property by a government agency for unpaid income taxes, business taxes, or property taxes. For instance, the Internal Revenue Service (IRS) may place a lien on a property if there are unpaid federal taxes. The IRS typically informs individuals in writing about their tax obligations before resorting to placing a lien on their property. The only way to remove such a lien is by settling the outstanding tax debt.

General judgment lien

A general judgment lien is granted to a creditor when a court rules in favor of the creditor in cases where a debtor fails to meet their financial obligations. The creditor must then record the lien through the appropriate county or recording agency. This grants the creditor the right to take possession of various types of property, including real estate, if the debtor doesn’t reach an agreement to settle the debt.

Mechanic’s lien

Mechanic’s lien, also known as a property or construction lien, comes into play when a property owner refuses to pay for completed work or supplies. Construction companies, builders, and contractors may file this type of lien to secure compensation in cases of payment disputes. Prior to filing the lien, they often send payment requests and notices of intent. If the debtor still refuses to settle, they proceed by filing paperwork with the county or relevant local agency, detailing the property, work performed, and the outstanding amount. The lienholder may choose to enforce the lien if the debtor continues to resist settlement.

Involuntary vs. voluntary liens

Liens can also be categorized as involuntary (nonconsensual) or voluntary (consensual). A voluntary lien is initiated when a borrower voluntarily pledges their property as collateral for a loan, such as a mortgage. Involuntary liens, on the other hand, arise when a creditor seeks legal recourse by filing a lien with a county or state agency due to a borrower’s default on a loan or financial obligation. Liens can be placed by contractors, government agencies, or other types of creditors.

Pros and cons of home liens


Here is a list of the benefits and drawbacks associated with home liens.

  • Provide lenders with security
  • Enable homeownership by securing loans
  • Ensure repayment of debts
  • Can complicate property transactions
  • May hinder refinancing options
  • Risk of property loss in case of default

Why are home liens important?

Understanding home liens is crucial for both homeowners and potential buyers. These legal encumbrances have significant implications for property transactions and ownership. Let’s delve into why home liens are important:

Impact on property transactions

When a lien is placed on a property, it can complicate the process of selling or transferring ownership. Potential buyers may be hesitant to purchase a property with an existing lien, as it can introduce delays and uncertainty into the transaction.

Effect on financing

Liens can also impact your ability to secure financing or refinance your home. Lenders may be reluctant to extend loans on properties with outstanding liens, as these encumbrances represent a risk to their investment.

Protecting creditors’ interests

From the perspective of creditors, home liens serve as a safeguard. By having a legal claim on the property, creditors can ensure repayment of debts, reducing the risk associated with lending significant sums of money.

Checking for home liens

Whether you’re in the market to buy a home or simply want to assess your property’s status, checking for home liens is a crucial step. Here’s how you can do it:

1. Visit the county recorder’s office

The county recorder’s office maintains public records of property transactions, including information about liens. You can visit this office in person or check their website if available online to access these records.

2. Use online property search tools

Many counties now offer online property search tools that allow you to look up property information, including liens, from the comfort of your home. These tools are user-friendly and can provide quick access to valuable information.

3. Hire a title company

When purchasing a property, it’s common to engage a title company to perform a title search. Title companies specialize in researching property titles and can identify any liens or encumbrances on the property.

Frequently asked questions

Can a home lien be removed?

Yes, home liens can be removed, but the process varies depending on the type of lien and the circumstances. Typically, removing a lien involves satisfying the financial obligation that led to its placement. For example, settling unpaid taxes can remove a tax lien.

How does a home lien affect the sale of a property?

A home lien can impact the sale of a property by making it more challenging to sell. Potential buyers may be cautious about purchasing a property with an existing lien, and it can lead to delays in the sale process as negotiations with the lienholder may be required.

What happens if I discover a home lien on a property I want to buy?

If you discover a home lien on a property you intend to purchase, it’s essential to investigate further. Consult with a real estate attorney to understand the implications and explore potential solutions. You may need to negotiate with the lienholder to clear the lien before proceeding with the purchase.

Are all liens equal in terms of priority?

No, not all liens have equal priority. The priority of a lien determines its position in line for repayment in case of property sale or foreclosure. Generally, tax liens and mortgage liens have higher priority than other types of liens, such as judgment liens.

Key takeaways

  • A home lien is a legal claim on a property used as collateral for mortgage loans.
  • Various types of home liens, such as tax liens, judgment liens, and mechanic’s liens, can affect property transactions and ownership.
  • Checking for home liens is crucial when buying a property, as they can impact your ability to secure financing and refinance.
  • Removing a home lien typically involves satisfying the financial obligation that led to its placement.
  • Consulting with a real estate attorney is advisable if you discover a home lien on a property you intend to buy.
View article sources
  1. lien – Cornell Law School
  2. materialman’s lien – Cornell Law School
  3. Real Property: Mortgages, Liens, and Landlord and Tenant – Southern Methodist University
  4. What Is A Mortgage Lien? – SuperMoney
  5. Lien vs. Encumbrance: Differences And Examples – SuperMoney