Selling a home can be a complicated affair. To avoid unexpected delays, you need to understand anything that may affect your ability to complete the sale. Liens are an important part of this equation but they can come in many different flavors.
What is a lien?
Fundamentally, a private property lien is a legal claim against your home. A lien is created due to an outstanding debt, giving the lender a legal interest in your property until the debt is cleared. Depending upon the type of lien, the lender may have the authority to foreclose upon the home and force its sale. Regardless, a lien acts as an encumbrance upon your ability to sell the property.
Home loan liens
The most common type of lien upon a home, they are the result of your mortgage. When you take out a loan to purchase or refinance your home, the lender uses the home as collateral. The loan agreement automatically creates the lien.
A mechanic’s lien is created when a homeowner hires someone to do construction upon their home but then fails to pay for the work done, either partly or entirely. This lien can be filed by contractors, subcontractors, materials suppliers or other parties with an interest in the construction work.
If you are sued in court and lose, a judgment lien may be the outcome. The party who won the lawsuit may be able to seek a judgment lien against your property to ensure payment of what they were awarded in the lawsuit.
Failure to pay your taxes can lead to a tax lien upon your property. Tax liens can be imposed by either the IRS or New York and its local government entities.