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Property liens get a bad rap, especially when you buy a property with a few still attached. Did you know you could volunteer to get a lien, though? Yup, it's true.

What is a property lien?

When a creditor makes a legal claim against a piece of property, that's called a property lien. Liens represent a non-possessory security interest in a piece of property. Property liens are a matter of public record, so they essentially let the world know that you owe someone money.

If a creditor wants their lien on real property to be valid, they need to file it with the county records office. The county records office does not approve all of the lien requests it receives. This way, they do not place fraudulent liens on homes.

Once the county records office has approved and filed the lien paperwork, they give notice to the property holder. This notice contains specific terms. These terms inform the owner about the reason for the lien. They also mention what the creditor is doing (or soon will be doing) to repossess the property.

Property liens are always attached to the property itself, not the person who owns the property.

Types of Property Liens

There are two main types of liens that can be placed on a property by a creditor. It is important to understand the difference, so if someone files a lien on real estate that you own, you know just how you need to respond.

Voluntary Liens

Voluntary liens are contracted or consensual.

They act as security for the payment of significant debt. Homeowners might accept a voluntary lien on their home if they wish to use any real estate that they own as collateral for a business or personal loan.

The main thing to remember is that voluntary liens are just that: voluntary. Both the debtor and the creditor agree to the terms beforehand. There is typically a predetermined amount of time that voluntary liens remain in place.

Typically, a mortgage lien is voluntary. This is because borrowers understand that the lender has a non-possessory security interest in their home until they pay off their mortgage.

Involuntary Liens

Involuntary liens have negative connotations because it means the homeowner owes money to a creditor.  By placing an involuntary lien, a creditor is essentially stating that they are seeking to foreclosure on the property, so it’s time to pay up. Quickly.

There are different types of involuntary liens. A common one is a mechanic’s lien, which unpaid craftsmen can place when they are not paid. Another is a tax lien, which is the result of not paying property or income taxes.

When to Use a Property Lien

Property liens are the final step a creditor takes when chasing unpaid debt.

Prior to filing a lien with the county records office, creditors will typically complete due diligence in attempting to contact the buyer and obtain payment prior to taking such drastic action. While liens are a surefire way for creditors to collect debt, they typically only use them as a last resort.

However, liens are not difficult for creditors to obtain if they have a valid claim on the property. Because of this, you should always take delinquent payments seriously!

If the debtor used his property as collateral for a loan (as is typically the case for mortgages), then the lender (be a bank or other mortgage company) has rights to the property. A creditor can easily obtain a property lien against a mortgaged property with money owed.

How do liens impact a property and its owners?

When a creditor places a lien on your home, it is very serious. If you do not take immediate action, your home will soon be in foreclosure.

Most involuntary liens remain on your property until you pay them off or successfully contest them. An exception to this would be a mechanic’s lien, which only stays active on a property for a set amount of time. The lien can expire if the filing party does not renew it.

Liens can also affect your credit score.

When paid, liens can remain on your credit score for up to seven years. Unpaid liens can remain for up to 10 years after the filing date. FICO does not specifically comment on the impact that liens can have on your credit score. However, the impacts of tax liens, bankruptcies, and foreclosures on personal finances can be devastating.

While you can technically sell a house with a lien, it is very difficult to do so effectively. This is because the buyer will not be able to secure financing, as no mortgage lender will provide a loan for a house with a lien on it.


It is also essential that you know exactly how much you owe. This is because when you sell your home, you can pay off the lien holders with part of the sale proceeds. You receive the amount left over, if any. If you transfer a property without paying off the lien, it remains on the property.

How can a homeowner find out if there’s a lien on their property?

When a creditor places a lien on your property, the county records office will promptly notify you. This way, you can respond. However, in the off chance that this does not happen, you can discover if there are any liens on your home (or a home you want to purchase!) by running a title search.

If you own a home, you hold its title. A title search returns a comprehensive list of individuals or entities that claim ownership of a property. Because of this, if there is a lien against a property, it will appear on the title report.

What if property lien has been placed incorrectly?

If you think a creditor placed a lien on your property in error, there are a few things you can do. First, contact the placer directly and try to get to the bottom of the decision.

If they refuse to remove the lien, you have the option to take the case to court for a resolution. If you win the case, the creditor can release the lien. If you do not, then you could always try to settle for paying off only a portion of the lien.

If you are unable to do this, you will need to pay off the lien in full. This is true even if you do not think it to be correct.

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Do you need help navigating buying or selling properties with liens involved? The real estate experts at Clever are standing by. Call us today at 1-833-2-CLEVER or fill out our online form to get started.  


Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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