What is a Lien?

A property lien is a legal claim placed on real or personal property by a creditor as collateral for a debt or obligation. It provides the creditor with the right to foreclose on or seize the property if the owner fails to meet their financial obligations.

When purchasing a title policy as part of your home purchase, your Title Agent will conduct a thorough title search and examination to identify any existing liens, encumbrances, or legal claims against the property. This not only protects the buyer from unforeseen financial obligations but also provides them with the confidence that they are acquiring a property with a good and insurable title!

5 Common Types of Liens

  1. Mortgage Liens: When a buyer obtains a mortgage loan to purchase a property, the lender places a mortgage lien on the property. This gives the lender the right to foreclose on the property and sell it if the borrower defaults on the loan payments.
  2. Property Tax Liens: If property taxes are not paid, local governments may place a tax lien on the property. The government can then sell the lien to an investor, who can ultimately foreclose on the property if the taxes remain unpaid.
  3. Mechanic’s Liens: Contractors, subcontractors, or suppliers who have provided labor, materials, or services for property improvements and are not paid can file a mechanic’s lien. This lien gives them a legal claim against the property’s value for the amount of unpaid labor, materials or services. The lien holder can foreclose on the property if the amount remains unpaid.
  4. Judgment Liens: If someone wins a lawsuit against a property owner and is awarded monetary damages, the judgment holder can place a judgment lien on all the losing party’s property to ensure they receive payment.
  5. Homeowners Association (HOA) Liens: Homeowners associations can place liens on properties for unpaid HOA dues, fines, or other assessments.

If you have any questions regarding liens, please reach out to your PGP Title Representative!