11 Types Of Liens That Can Be Placed On Real Estate

By on February 5, 2014

Liens are something that many home owners do not notice until they make a title search. It is something that investors absolutely have to uncover when buying properties. It is also something that most newbies only learn about when closing is imminent.

A lien is “form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation” – Wiki. Here are 16 of the most common types of liens you might find in your title one day.

For anything concerning legal matters, it is best to consult a local attorney for clarity on what is applicable according to your local laws.

Property tax. This is placed on the property by local tax authorities. It happens when you fail to pay your property tax.

Income tax. Failing to pay tax is a mischief that everyone should avoid. It is something that the tax authorities will absolutely follow up on. They owe it to themselves to collect it so that the country can run properly. And owe it to all other individuals who pay their taxes on a timely manner. This statutory lien can be placed when you fail to pay your income tax.

Mechanics. This concerns the people who you have hired to build your home. They can include contractors, engineers, architects, surveyors, plumbers, mechanics, etc, who have completed the required work for you, yet you did not pay them what is due. When this occurs, they can place a lien on your home as a form of collection.

Judgement. Judgement liens are often the results of lawsuits that require the property owner to pay damages. When the owner does not have the funds to pay the damages, a lien can be placed until the damages is properly paid.

building-home-propertyMortgage.  When a home buyer takes up a mortgage, the property is used as collateral for the repayment of the loan. In many parts of the world this can also be referred to as a “deed of trust”. When second or third mortgages are involved, it can complicate matters.

Inheritance tax. If you are in a territory with inheritance tax, a tax is levied on the properties of the deceased. If this tax is not paid, it becomes a lien on the property.

Bail bond. When property is pledged as a bail bond so that an individual is released on bail, a lien is created.

Building code. Different buildings, different areas, and different countries can have differing building codes for particular buildings. You are responsible as an owner to make sure that you adhere to these codes to align with the objectives of the authorities. Failing to comply with these requirements can result in penalties in the form of fines and liens.

Municipal purposes. There is little chance of getting away from paying your utility bills like those for electricity, water, sewage, disposal services, etc. Because even if you manage to sidestep the collections each time, they can get back at you by placing a lien on your home.

Marital support. If your marriage had somehow brought you to court, the court might have ordered you to provide a specific sum of money on a consistent basis as marital support. A lien can be placed when you do not make these payments.

Child support. Similar to marital support, a court might have ordered you to provide adequate child support via recurring payments. When you fail to do so, watch out for a lien.

Something that you have to take note of when searching for liens is the time period between when they are placed, and when they actually show up in title searches. Deficiencies in administrative processing can mean a considerable gap preventing you from getting access to timey information.



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