How Can Liens Against a Property Affect a Home Closing?

 Posted on December 09, 2020 in Real Estate

Residential real estate transactions can be very complex, and whether you are buying or selling a home, you will need to address a variety of legal issues and meet a number of requirements. As you prepare for your home closing, you may encounter obstacles that affect your ability to complete the transaction. One issue that may arise is the discovery of liens against a property, and these will need to be cleared before your closing date.

Understanding and Clearing Liens

A lien is an unpaid debt that is attached to a property. There are a variety of situations in which liens may exist, including:

• Mechanic’s liens - If a contractor or subcontractor was not fully paid for construction work done on a property, they may file this type of lien to recover the money they are owed.

• Tax liens - If a homeowner has failed to pay federal, state, or local taxes, a lien may be placed against their property until the amount owed is paid in full.

• Judgment liens - A homeowner may be ordered to pay damages in a civil lawsuit, and the plaintiff may take out a lien to collect this amount.

Before a real estate transaction can be completed, the property must have a clear title, meaning that there are no encumbrances that would prevent the transfer of ownership of the property. Liens that are attached to a property will need to be resolved, either by paying the amount owed, having the lienholder release the lien, or filing a legal petition to have the lien released.

The seller may be able to clear liens by paying the amount of the lien in full, or they may be able to negotiate payment of an appropriate amount to the lienholder. In some cases, unreleased liens may still exist after the amount owed has been paid, and property owners will need to obtain an official release from the original lienholder. If a seller cannot or will not clear a lien on a property, the buyer will usually be able to back out of the transaction.

Contact Our Waukegan Residential Real Estate Lawyers

Whether you are buying a new home or selling your current home, the attorneys of Newland & Newland, LLP can help you address any issues related to liens. We will perform a title search to uncover any encumbrances that may affect your transaction, and we will work with you to clear any liens and address any other issues that could delay or prevent closing. To learn more about how we can make sure your real estate transaction proceeds as smoothly as possible, contact our Gurnee home closing attorneys at 847-549-0000 to arrange a complimentary consultation.

Sources:

https://www.lansingstatejournal.com/story/marketplace/real-estate/2017/06/26/can-lien-affect-closing/103121030/

https://www.fool.com/millionacres/real-estate-basics/real-estate-terms/what-mechanics-lien/

https://www.levelset.com/blog/how-to-sell-property-with-a-mechanics-lien/