Understanding the Impact of Property Liens During a Real Estate Transaction

Property title searches can turn up many issues that could impact a person’s ability to buy and sell real estate. While it is the seller’s responsibility to rectify the problem, a title company, like Capitol Title, will have witnessed all parties involved experience disappointment when negotiations crumble due to a title search that has shed light on potential issues. While it’s possible to move forward, a lawyer may need assistance resolving such matters. Two things that may come up from a property title search are liens and easements. At times, liens and easements may be challenging to fix, which could either delay the sale or, worse, impact both parties’ ability to sell and buy the property.

Liens

A lien is one issue that may arise from a property title search, which essentially means that a creditor is holding property as collateral until a debt is paid. Liens must be cleared before a property can be sold. Mortgage liens are among the most common results when a property owner fails to pay their mortgage. The bank or mortgage company may wish to sell the home to settle the debts. Often, the house will go into foreclosure. Other types of liens that may come up during a property title search are: 

Voluntary Liens: gives a lender the ability to foreclose on real estate for unpaid debts. When the debtor fails to make payments, they breach their contract, and a lien allows the creditor some form of protection. Voluntary liens come in several forms such as:

  • Real Estate
  • Vehicles
  • Boats

Involuntary Liens: can be placed on a property against the owner’s will. Regulatory authorities often place these types of liens on debtors for unpaid debts. Examples of involuntary liens are:

  • Property Tax Liens
  • IRS Tax Liens
  • Construction Liens
  • Judgment Liens
  • Child Support Liens

A lien can impact the sale of real estate as the property owner will not be able to transfer their property because their creditors have a stake in it. However, know that with assistance from a real estate lawyer, it may be possible to come up with a solution such as paying off the lien, negotiating with the prospective owner to purchase the property with the lien, or even dealing with the creditor to come up with a solution. 

The Benefits of a Property Title Search Lawyer

Title searches during real estate transactions are commonplace, and a requirement before a buyer can secure a mortgage loan. Some property title searches can unearth issues. Older properties may have a significant history of owners, the property in question may have one or more liens, there may be easements that the prospective buyer may have been unaware of. While some of these may be deal-breakers, it may be possible to salvage a real estate deal with a lawyer who can provide guidance when home sellers and prospective buyers need them the most.  

A thorough property title search is essential for purchasing a home. Not only do mortgage lenders require them, but they also make sure that the buyer of a prospective property has as much information as possible before making such a significant purchase.