When can Someone Put a Lien on my House?
A person or organization can usually put a lien on a home any time a person fails to take care of a debt. This includes cases of unpaid taxes, child support and some marital actions. Doing so usually requires giving the homeowner notice and filing paperwork with local authorities, however, and it's usually not possible to sell the property without a formal court judgment first.
A lien is the legal term for the right of one party to sell property that belongs to someone else. When a homeowner has one of these claims against his house, it can create serious problems, such as making it harder to find a buyer or to refinance. Some individuals also end up turned out of their homes.
In most cases, when someone owes any kind of debt acquired through borrowing, not paying for goods or services or from previous legal judgments, the person or organization owed can take him to court. If the judge finds in favor of the plaintiff, he might put a lien on the debtor's home. The plaintiff then may sell the property if the debtor can't bring his account current, giving any extra funds from the sale back to the homeowner.
Typically, a judge tries to arrange alternative ways to erase debts, such as wage garnishment, because often the value of the property exceeds the amount on the homeowner's delinquent account. A court doesn't want to sell a home worth $300,000 US Dollars (USD) for a debt of only $10,000 USD, for example, but it will do so if the property truly is the only thing of value the homeowner has and no other options are available. Additionally, plaintiffs are not always limited to one recovery method once they receive a judgment in a lawsuit, so if the amount owed is big enough, they might go after things like the debtor's car in addition to the home.
Mortgage agreements are perhaps the most common sources of home liens within the larger judgment category. When a person borrows money to buy a home, the lending institution places a claim on it until the mortgage is paid in full. If the homeowner doesn't keep up with payments, the lender might try to foreclose and take the property. The situation is similar when a homeowner takes out a second mortgage or home equity line of credit.
A government may put a legal claim on a home in some cases. It typically resorts to this when people owe local, state or federal taxes and other methods of payment collection haven't been successful. The tax office might assess additional penalties, fees and interest on top of trying to get the property. In the United States, the Internal Revenue Service is responsible for the enforcement of tax payment and the placement of liens.
When a person has not paid his property taxes and his home also has a current mortgage, the lender often steps up and pays the balance. As an entity with a financial interest in the house, the bank would rather do this than see it sold. It adds the amount of tax paid to the mortgage balance, however, so the homeowner still has to deal with the delinquency eventually.
If a person works with a contractor, such as an electrician or a plumber, and doesn't pay his bill, the contractor can place a mechanic's lien on the debtor's home. Some people authorize this when they make payment arrangements on large improvement projects. Many times, workers won't try to take the property by going to court, but because the claim technically is still valid, it restricts the homeowner's property and financial options.
Courts may allow a person to put a claim on someone's house in two major domestic instances. The first is if the homeowner owes a significant amount in child support. The second is during marital actions in which one spouse wants the lien in order to cover attorney costs. This happens only when the home is legally viewed as community property, and if it is granted, it doesn't effect the other spouse's interest in the home.
Points to Consider
Securing rights on a home requires that a person or organization go through the proper legal channels, which usually means giving the debtor formal notice of the intent to file paperwork with the proper local authority. The filer also usually has to publish the claim, alerting the public to his rights. This sequence, along with the fact that enforcement typically requires going to court, makes it quite rare that anyone would be in danger of losing their home because they weren't aware of their obligations.
Sometimes, a homeowner ends up with multiple filings against his property. In this case, current laws determine which entity gets priority. Ones that take precedence are known as superior, while secondary claims are called junior.
This kind of legal action connects to bad debt and, therefore, can cause a person's credit score to drop. As with repeat bankruptcies, having multiple claims is worse than having a single one. It is to a person's financial benefit to do all he can to get his credit back in good standing in these cases.
I had to have my home renovated because the upstairs neighbor's water pipe came loose and flooded my condo. I had to hire a contractor because the flooding was so extensive. I work for myself and have no way to secure a loan.
I have paid the contractor a large sum for the work don, but not the full balance. I have told the contractor that I would continue to pay him monthly payments but they have put a lien on my property anyway and have kept my promise. However, their attorney has stated in a letter that they could force me to sell my condo. Is this true? I live in Wake Country, North Carolina.
Can the state of New York lien your home for unpaid business taxes?
Can the association put a lien on my house for not picking up after my dogs?
If you buy a tax lien home that has a bank loan, do you have to pay it?
Can someone put a lien on my house if there was no contract or anything signed?
Is it possible for me as a borrower to file a lien on my own house against the lender?
GreenWeaver - I agree and this is why I think that short sales are so hard to sell because the homeowners usually have additional liens on the property.
I almost purchased a short sale property but the bank wanted an additional $70,000 to settle the second mortgage lien placed on the property.
For me as a buyer it was easier to find a bank foreclosure so that I would not have to deal with these hidden landmines.
Mutsy - I know what you are saying but on the flip side some people stay away from homes that have liens on them.
For example, at foreclosure auctions that are given at the courthouse steps many of the homes have significant liens on them. In order to buy these homes safely you would have to do a title search which can cost about $500 on each property that you are interested in order to make sure that the title is free of liens because if you are the winning bidder than you will assume the responsibility for these liens.
This is what happened to an investor in New York that purchased a home at a courthouse auction. He purchased the home at $40,000 below market value but the home had $60,000 of unpaid liens that he did not know about.
This is why if you are seeking to buy at an auction it is better to look at a bank auction. Bank auctions are different because the banks already cleared the liens and have a clean title to the property.
In my opinion, it is a better to hire a lawyer to see how about to receive payment from the lien. Even if you receive a judgment in your favor in court, it does not mean that the defendant will pay, but an attorney could at least settle with the defendant so that you can get some money.
If the amount is high enough the lawyer may try to push the sale of the property.
A mortgage lien could be place for unpaid utilities, and unpaid homeowner’s association dues.
In fact there have been cases in which a homeowner’s association was able to foreclose on a property with delinquent homeowner’s association dues.
If you are thinking of filing a lien you would have to go to the county office and file a clam under the land records. The bad thing about the lien is that you will only get your money when the house is sold. If the homeowners never sell the home you are out of luck.
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