A mortgage is a lien you agreed to.

An involuntary lien is different.

It is generally a claim that can attach to property without the owner voluntarily pledging the property as collateral.

Depending on the state and circumstances, involuntary liens can include things such as:

  • Tax liens
  • HOA liens
  • Judgments
  • Mechanics liens
  • Municipal or utility-related liens
  • Certain assessments
  • Other statutory or court-created claims

And when you're trying to sell a property, they matter.

Will an Involuntary Lien Stop the Sale?

Not necessarily.

Many involuntary liens can be resolved as part of the closing process.

The title company may obtain a payoff or release requirement, collect the necessary funds through escrow, pay the lien from the seller's proceeds and make sure the appropriate release is obtained or recorded.

That's often completely manageable.

What creates problems is finding the lien too late.

If the title company learns about it days before closing, everyone suddenly has to determine:

  • What is actually owed?
  • Who needs to be contacted?
  • How long will they take to respond?
  • Will they accept payment through escrow?
  • What documentation is required to release the lien?

That can turn something relatively simple into a closing delay.

Some Liens Are Easy. Some Aren't.

An HOA lien for a relatively small delinquency may simply require obtaining an updated payoff and paying it through closing.

A tax lien may require coordination with a taxing authority.

A judgment may require additional research to determine whether it actually attaches to the seller or the property.

Sometimes removing a lien isn't as simple as writing a check.

There are situations where a lien is disputed, incorrect, expired, belongs to someone with a similar name or requires legal action before it can be removed from the property records.

In those situations, an owner may need an attorney and potentially a court order.

That takes time.

And it can cost money.

What Is a Mechanics Lien?

A mechanics lien is one of the more misunderstood involuntary liens.

Despite the name, it generally has nothing to do with an auto mechanic.

A mechanics lien can arise when a contractor, subcontractor, material supplier or other qualifying party provides labor, materials or equipment used to improve real property and claims they weren't paid.

The exact requirements and deadlines vary significantly by state.

That's important because mechanics liens are creatures of statute. Someone generally has to follow specific notice, recording and enforcement requirements to preserve those rights.

A lien appearing in the public records therefore doesn't necessarily tell you the entire story.

You may need to determine:

  • When was it recorded?
  • What work was performed?
  • Was proper notice given?
  • Was it paid?
  • Has it expired?
  • Was an enforcement action filed?
  • Was a release ever recorded?

A Recorded Lien Can Be Wrong

This happens more than many property owners realize.

Something gets paid, but the release never gets recorded.

A lien is indexed against someone with the same or similar name.

A prior transaction should have cleared something and didn't.

A document contains an error.

That's why seeing something appear in preliminary property information doesn't automatically mean the amount is currently owed.

Sometimes additional research is necessary.

This Is Exactly Why We Like Finding Liens Early

A Property DNA Report may identify potential involuntary liens before a property is even listed for sale.

That doesn't replace the formal title examination performed during an actual transaction.

But it provides an early warning.

And early warning matters.

If we know there's an HOA lien before the property is listed, we can start asking questions.

If we know there's a judgment before a buyer is waiting to close, there's time to investigate it.

If we know there's a mechanics lien, there's time to determine what needs to happen.

Don't Panic. Investigate.

Seeing the word "lien" on a property report can sound scary.

It doesn't automatically mean you can't sell.

It doesn't automatically mean you'll lose the property.

And it doesn't necessarily mean the amount shown is even currently owed.

It means there is something that needs to be understood.

That's where your title company comes in.

At Viking Title, we'd much rather help identify and work through an issue before the closing clock is ticking.

Because many title problems are completely manageable.

They only become emergencies when nobody knew they existed.

Lien rights, deadlines, enforcement procedures and release requirements vary by state and lien type. This article provides general educational information and is not legal advice.