Nothing is worse when you are buying or selling real estate than discovering a title defect. When a title search turns up a problem, the transaction will be stopped in its tracks. A common defect we see here in Ohio is a property lien.
What Is a Property Lien?
Generally speaking, a lien is a claim against an asset imposed by an entity that is owed money by the asset owner. A property lien refers specifically to a claim against a house, commercial property, or plot of land. This happens when a creditor obtains a court order entitling them to the property if a debt is not paid. If, for example, a person owes back taxes and has no liquid assets to pay them, the state or federal government could place a lien against their home so that when they sell the property, the debt will have to be paid.
How a Property Lien Will Stop the Sale of a House
If a property lien is discovered in a title search, it is considered a title defect, and the real estate transaction will be halted until the lien can be cleared. In some cases, the lien was imposed on a previous owner, not the owner selling the property. It will take the work of a real estate attorney to resolve the lien and clear the title. Common types of property liens include:
- Mechanics lien. This might also be called a contractor’s lien or builder’s lien, but the result is the same. If the homeowner did not pay for work done on the house, the company that did the work could place a lien against the house.
- IRS lien. The IRS could place a lien on a property if the owner failed to pay income tax. Because it involves the federal government, this kind of lien can be difficult and time-consuming to resolve.
- Child or spousal support lien. If someone has failed to pay court-ordered financial support, they could have their wages garnished and have a lien placed on any property they own.
- Judgment lien. If the owner failed to pay income, payroll, business taxes to the state of Ohio, the state could obtain a judgment lien against the taxpayer’s property. The owner often isn’t aware of the lien until they go to sell the property or refinance a mortgage.
- HOA lien. Homeowners associations (HOAs) assess fees on residents and can issue a property lien for unpaid dues.
Many of these situations can be resolved by the seller paying off the debt that is owed. However, because the lien is attached to the property and not the person, the debt could pre-date the current owner, and it could be difficult to resolve the issue in order to finalize the transaction.
Trust Our Real Estate Team to Help. Contact Our Ohio Attorneys Today.
When a property lien cannot be easily resolved, our real estate litigators will get to work finding alternative options. There are multiple legal avenues that can be explored, and I would be happy to discuss your specific situation with you. If a title search has turned up a property lien—or any other type of title defect—contact Littlejohn Law for help.