What is a Lien?
In the United States, liens are a common aspect of real estate transactions, even for parties not specializing in real estate. They are a civil liability to the person on whom they are imposed, and they often result in the transfer of the legal title of a property from a creditor to a debtor.
Essentially, liens are imposed on people who owe money to someone else. They are a form of security interest often used by laborers and suppliers, contractors, subcontractors and materialmen, mechanics, landlords, and tenants to ensure that the person on whom the lien is placed pays the amount owed.
A lien can be created by operation of law, but Liens almost always require some action by creditors. Liens may result from court orders issued by US courts. However, they typically involve contract disputes based on one party's alleged breach of obligations to another. For example, a subcontractor may obtain a lien against a property owner due to failure to meet a contractual obligation. Liens also regularly arise when debtors fail to meet specific deadlines for payment. Liens on realty typically involve a default or failure to meet a contractual obligation. Any "lien" that attaches to personal property must be perfected with notice in most jurisdictions.
Are Liens Public Record?
Liens are public records, and interested members of the public may view or copy them, provided they are not deemed private per judicial order. Federal law requires all liens to be filed with the county or other jurisdiction where the debtor resides or does business and the Freedom of Information Act requires these records to be made available for public inspection. This ensures that creditors have a legal claim against a debtor’s property or assets. While this law applies to all 50 US states, each has its own specific rules and regulations regarding the filing process of liens.
Types of Lien in the US.
There are different kinds of Liens in the US. However, they can all be categorized as general or specific. A general lien means that the creditor has a secured interest over a range of assets. In contrast, a specific lien means that the lender has a secured interest over a particular asset.
Liens may also be categorized as voluntary or involuntary in the U.S. It is voluntary when the debtor willingly consents to the lien and involuntary when the debtor's consent is not required in the foreclosure of assets because of a default.
The following are other notable categories that Liens are classified into:
- Liens against real property
- Liens against personal property
- Liens against wages
- Liens upon written instruments to secure payment of money
- Liens for taxes and assessments
Liens Against Real Property
When an individual purchases a home, the seller gives the new homeowner a legal title to the home and warrants that they do not owe outstanding mortgage liens or other encumbrances on the property. The implied warranty ensures that when the buyer purchases a house, there were no other interests in it such as easements and an unrecorded lien on which someone could foreclose if they did not receive full payment for any debt incurred. Liens against real property are of two types - those on fee simple absolute and those on limited interest.
A lien, mortgage, judgment, or other encumbrance affecting the whole of an estate would be located on land records in the county where the land is situated. If this type of lien passes through probate court, then all assets will have to be used up before the creditors can be paid. Liens such as mortgages usually last for ten years whereas mechanic's liens (liens placed by those who do work on a property) last for two years.
A lien upon the limited interest in the real estate is one that is placed against only a specific portion of the land. Liens or encumbrances affecting less than all of an estate and which pass through probate may be paid down from general assets before they can attach to any separate property not subject to such claims. Liens affecting just a part of an estate include things such as easements, restrictive covenants, and leases. Liens that arise due to unpaid taxes remain attached to the piece of property until they are paid off whereas other types of liens usually expire after a certain amount of time.
Liens against real estate may also be either statutory or non-statutory depending on whether they originate from a statute or from contract law. Liens that are created by statutes include property taxes, mechanic's liens, warehouseman's liens, and special assessments. Liens created by contract law include vendor's liens, contractual Liens for improvements to land, and implied Liens in favor of laborers and materialmen.
Non-statutory Liens
A non-statutory lien is one that arises solely through the agreement between two parties. Liens such as mortgages arise when a debtor is willing to agree in writing to give someone a security interest. Liens such as those for unpaid debts on open accounts and on personal property arise based on contract law. Liens that arise due to a breach of contract or on written instruments to secure payment of money include:
Liens on Real Estate by Vendors and Material Men
These liens are also called express liens, can be enforced by only those who provided the materials, labor, or services that improved the land. A vendor's lien attaches to any real estate were provided within six months prior to the filing of a notice of such a lien at the recorder's office in either the county.
Liens On Personal Property By Material Men
These can be enforced against anyone who has an interest in personal property Liens of this type also attach to any improvements made to real estate.
Liens On Personal Property For Labor Or Services Provided
These may be enforced if the detor fail to make payment within 90 days of receiving a statement of charges. Liens filed, for this reason, are only valid if the notice is recorded at the recorder's office with jurisdiction over the area where debtors personal property is located. While these types of liens are not as secure as statutory Liens, they may still be enforced against them and do not act to remove them after receiving notice that they exist. Liens for unpaid balances on the open accounts including credit card debt and
Liens On Personal Property By Repossessors
These liens can be enforced when the debtor's property is taken in order to sell it at auction
Liens For Taxes Or Assessments
These types of liens are placed against a debtor's real estate to satisfy back taxes or special assessments levied against the land. Liens of this type can result in foreclosure, which is where the court grants the title of the property to the lienholder upon satisfaction
How Do I Check for Liens in the US?
In many cases, a lien becomes part of the public record, and anyone who plans to purchase or refinance that property must be informed about liens against it.
The type of lien, the date recorded, and the amount owed are all made part of the record in what is known as a "Liens" index. If a lien exists, it will be in this index. Depending on state laws, liens may be binding for up to 20 years, but they may be removed if the debt is satisfied.
Free Lien Search in the US.
To search for a lien at no cost, requestors may start by checking local county records in the judicial district where the property is located.
Liens on homes or rental properties, liens for unpaid property taxes, are usually maintained by county recorders, while federal authorities manage federal tax liens. Requestors may query the appropriate office and view the required information free of charge. However, if the requesting party requires a copy of the record, they will be required to cover the cost of duplication.
What is a Property Lien in the US?
In the US, a property lien refers to a creditor's claim over a debtor's property. Liens can be attached to real or personal property, depending on the type of debt owed and the nature of the agreement. Ultimately, liens are a form of collateral, should the debtor default on their payment.
Any "lien" that attaches to personal property must be perfected with notice. Thus, the creditor must file a financing statement registering the lien with the appropriate government office.
Property Lien Search by Address
To conduct a property lien search by address, inquirers may contact their local county assessor’s office and request all records related to liens on the particular property they are interested in. After providing the custodian with the specific address, they should be able to provide all records associated with it.
Requestors may also visit the county courthouse to obtain more detailed information about any liens not mentioned in the records from the assessor’s office. They can request a copy of all documents related to foreclosure, bankruptcy, or tax lien filings on the property being researched. In either case, requests can be made in person or via mail, and the requesting party may be required to provide additional information to facilitate the lien search.
What is a Tax Lien in the US?
Tax Liens are typically placed on debtors' property by federal, state, or local tax authorities to recover taxes where the owner is unable to amount owed or has no refuses to pay them voluntarily.
All states have statutes that allow for the recording of tax liens. Liens typically attach to all property and rights to property belonging to a taxpayer, including after-acquired property.
Tax Lien Lookup
To conduct a tax lien lookup, access the public records in the county where the property is located. This information can be found in the local county clerk’s office or using an online service operated by third-party aggregate sites.
In order to process a tax lien lookup, requestors will be required to provide information to facilitate the lookup including:
- The name of the property or person who is being researched
- The address of the property associated with the research subject
- A description of the property, if applicable
- The tax parcel number or other identifying information, such as a deed book and page number.
What is a Mortgage Lien in the US?
A US mortgage or real estate lien is a claim that gives the lienor the right to retain possession of a debtor's real property until all debts are paid. Liens do not automatically transfer the title to the lender or creditor because the lien serves as a claim rather than an automatic ownership transfer.
Liens typically result from court orders involving contract disputes based on alleged breach of obligations by one party to another. Depending on the jurisdiction and the type of action, this may result in judicial foreclosure (sale) of realty to pay off the claimant's debt. Liens also regularly arise when contractors fail to meet specific deadlines for payment, in which case further work is prohibited until the lien is removed. Liens on realty typically involve a default or failure to meet a contractual obligation where money is owed by one party to another.
What is a Mechanics Lien in the US?
US mechanics liens exist where personal property is improved at another person's request and expense but with no transfer or assignment of ownership. A mechanic's lien is deemed a priority over all other claims except those involving federal liens. However, mechanics liens typically apply only to work done after a contract has been signed between parties making payment contingent on completion of work agreed upon in that contract.
A property lien is placed on real estate or personal properties to protect the creditor from default in debt repayment. This lien prevents the property owner from selling the property before clearing the debt. Property lien focuses on safeguarding the creditor from unpaid debts, while mechanics lien provides security to suppliers and subcontractors for improved property or material supply.
What is a U.C.C. Lien?
US UCC liens apply only to those who either "deal with" or "constitute consignors or bailors" of goods covered by a lien, as defined under UCC sections 9-109 and 9-321, respectively. This means that a mechanic's lien is not a UCC lien since a contract between a debtor and creditor is not involved in creating the lien. Liens may attach automatically when goods are delivered to the debtor without their purchase being conditioned upon acceptance of delivery by signing a warehouse receipt or other document transferring title from the seller to the buyer.
What is a Judgment Lien?
A judgment lien authorizes a creditor to enforce a lien by foreclosing, taking over, or selling a property to recoup the amount owed.
Once a court has rendered a judgment, creditors can enforce a lien on a debtor's real or personal property within their jurisdiction until all outstanding debts are paid in full. Liens may also be placed on any claims made against an individual's bank account.
What is a Federal Tax Lien
A federal tax lien is a legal claim by the Internal Revenue Service (IRS) against a piece of real estate, personal property, or financial assets. When an individual fails to pay taxes owed to the IRS, they may file a Notice of Federal Tax Lien in public records. The IRS can then take enforcement action to collect what is owed, including seizing and selling the property. This type of lien serves as notice to any creditor that the IRS has priority over other creditors for repayment of taxes from the proceeds of any sale of the property. It also prevents the property owner from transferring or selling certain assets until the debt is satisfied.
Regardless of a federal tax lien on a property, the owner may still be able to use it as collateral for a loan. However, the IRS lien will have priority over any other creditors in collecting the sale proceeds if they default on the loan.
What is a Lien Title?
A lien title is a legal document that states the amount of money and other terms owed to an individual or business. It is a form of collateral and can be used to secure payment if the debtor fails to pay. Lien titles are typically used by banks, mortgage lenders, and other creditors when extending credit to individuals or businesses. Also, liens may sometimes be placed on real estate or personal property. In such cases, the lien title serves as proof of ownership and is used to secure payment on the debt. Lien titles are public records; anyone can search for them to identify if a particular property or individual is under a lien.
Where and How to Do a Title Search
Title searches may be conducted at the county courthouse in the county where the property is located or by an experienced title company. The process involves examining the public records to determine whether there are any liens, encumbrances, judgments or other restrictions on the property that could affect its marketability. Title searches may also reveal information about past and current owners of the property.
To conduct a title search, the inquirer must provide the county with a legal description of the property, which includes its address and parcel number. They may also be required to pay a nominal fee to cover the cost of the search or duplication of the documents provided. Upon completion of the title search, the county will issue a title report or certificate of title.
Voluntary Lien vs. Involuntary Lien in the US?
In the US, Voluntary liens are established with the consent of the debtor or property owner. They are placed on a property when its owner uses it as a security interest for a loan (e.g. bank loans or mortgages). On the other hand, involuntary Liens are placed upon one's property without their consent or under aggravated circumstances that require the use of lien holders themselves or outside sources to gain compliance.
Involuntary Liens can be granted when an individual violates a legal requirement, such as non-payment of child support or tax debts. They can be public, such as for unpaid taxes, e.g., federal, state, and local. However, they also can be private in the form of a judgment from a creditor(s). With this lien, creditors typically go through the court system to seize debtors' property.
How Do You Know if a Property Has a Lien in the US?
The process for determining whether or not a property has a lien in the US varies with the lien or property in question. For instance, when the government places a lien on property for unpaid federal taxes, the property owner is expected to recieve a notice of said lien. However, people with interest in the property may obtain information about the lien by querying the local courthouse in the jurisdiction where the property is situated. Interested persons may also obtain information about a federal lien by requesting a copy of a Notice of Federal Tax Lien through their lawyers.
How Creditors Collect Payment Through a Lien
Liens offer creditors security by being attached to a debtor's assets. Hence, a creditor can collect a payment through a lien by foreclosing on the property in question. A foreclosure or forced sale can only be conducted after the creditor has received a judicial order to enforce the lien.
Liens on accounts receivable also serve as a security interest for sellers if the buyer receives goods and fails to pay. Summarily, a creditor who holds a lien on an item or property has a right to take possession of the item or property if the debtor fails to fulfill their contractual obligation.
How Do I Get a Lien Removed in the US?
There are several ways that a lien can be removed in the US. However, requestors will be required to fulfill the jurisdiction's eligibility requirements before proceeding.
Debtors may have a lien removed by fulfilling their contractual obligations or paying the amount owed in full.
Liens can also be removed by negotiating a payment arrangement with the creditor. In this case, the debtor will be required to prove their ability to repay the amount owed.
alternatively, the debtor can have the lien removed by petitioning the court for a judicial order. However, the court will only authorize removal if it is proven that the lien was established fraudulently or with false information. Lien removal requires petitioning the county clerk in the jurisdiction where they were originally filed. Liens may also need to be re-filed with each new county when people move. Creditors may not renew liens by court order in some regions of the United States, such as in California and Texas.
Personal liens may be eliminated when a person files for Chapter 7 bankruptcy, but liens on property usually remain after filing for personal bankruptcy. Liens on a property may be removed when a person files for Chapter 13 bankruptcy, but liens remain in place until liens are paid.
Filing liens do not eliminate other debts incurred by the debtor.
How Long Does a Lien Stay on Your Property in the US?
While a lien stays on a property until it is paid off, the type of lien placed and the jurisdiction where it is filed may affect how long it stays on the property.
For instance, Ala. Code § 6-9-1 provides that an Alabama judgment lien will remain on a property for at least ten years while Fla. Stat. § 55.081 allows Florida judgment liens to expire after 20 years of its issuance. Meanwhile, Georgia judgments are not enforceable after a 7-year period.
Similarly, while tax liens and child support liens typically remain until they are paid off, mechanics liens may be filed and enforced no more than one year after the service was rendered. A non-judicial lien stays on the property until paid off unless it is foreclosed. On the other hand, a judicial lien stays on the property until the amount of money owed for services supplied is paid.
How to Avoid a Lien in the US
A lien is usually filed on someone's property to secure debt payment, whether it is for services rendered or products sold. Essentially, anyone who claims they are owed money can place a lien on a person's real or personal property. Since lenders will often place a lien on the borrower's house until the balance is repaid, the best way to avoid a lien is to avoid debt, especially when there is no means to service the loan.
