People often think of tax when they hear of liens. However, it encompasses just taxation. To further understand what a lien is, think of it as a claim on your property, as security to any debt you might owe. Some of the things subjected to a lien include property, cars, child support, business, or more.
Since there are different types of liens, here are the primary liens you should know. This information will help, especially when buying a home. You don’t want to buy a home that has some liens, as that will cost you more money than the house itself.
Without further ado, here are the types of liens you should know.
- Tax Liens
A property is said to have a tax lien if there are outstanding payments yet to be paid to IRS. Due to this, the body places a lien against the property until the tax owed has been repaid. In most cases, it isn’t always a case of unpaid federal income taxes. You can have a lien placed against you if you have some due real estate taxes or property.
This lien is pretty standard, and it happens when you owe the government some tax debt. If you’re contemplating buying a house, ensure this type of lien is not in play to avoid paying for someone else’s debt.
- Mechanic’s Liens
In the event where you hire a mechanic or contractor to work on your property, and you fail to pay, they have the right to place a mechanic’s lien on your property. Most of the time, this type of lien is called ‘construction lien,’ and it occurs when you fail to pay for the services rendered.
If you’re a contractor, placing a lien on a property can help you get paid for your services. All you need is to hire a reputable attorney, and you’re good to go. If perhaps you’re trying to buy a property that has a mechanic’s lien, ensure the seller settles before you proceed with the deal.
- Home Buying Liens
Home buying liens are often the first mortgage that uses the home as collateral, thereby lending the bank the first lien on the property. If you’re buying a home, don’t hesitate to conduct a title search and make sure there are no liens on the property.
If there are, ensure the seller settles before you proceed with the deal. If the lien is not removed, the property remains debt security that can be taken away if it isn’t paid off.
- Judgment Liens
Judges place judgment liens, and they often arrive as a result of a lawsuit from creditors. This type of lien would give the judge the power to foreclose, especially if the lien won the case. If that happens, this can prevent a seller from transferring property title to a new buyer.
- Consensual Liens
As the name suggests, this is a situation where both parties agree for a consensual lien to take place. Many things can give rise to such a case, and a property cannot be transferred if this kind of lien is on the proposed property.
By hiring a reliable lawyer to conduct a title search, you might find out if there is a lien on the property or not. This finding will help you make decisions that will favor you in the long run.
Contact Lamb, Carroll, Papp and Cunabaugh, P.C., Attorneys at Law today for legal help.