What Is a Lien on a House?

A home lien gives a lender, creditor, or other party a legal claim against a property because money is owed. The lien can remain attached to the property until the underlying debt is resolved.

There are two broad types of property liens:

Voluntary Liens

A voluntary lien is one you agree to as part of borrowing money. A mortgage is the most common example. When you finance a home purchase, the property serves as collateral for the loan, giving the mortgage lender a lien until the mortgage is paid off.

Involuntary Liens

An involuntary lien can be placed on a property without the homeowner voluntarily agreeing to it. These may result from unpaid financial obligations or legal judgments.

Examples can include:

• Unpaid property taxes

• Contractor or construction-related claims

• Court-ordered judgment liens

• Unpaid HOA assessments

• Certain other unpaid debts

The specific rules surrounding these liens vary by state and situation.

How Can a Lien Affect Your Home?

A lien does not necessarily mean that you immediately lose your home. However, leaving a lien unresolved can create significant complications.

A lien may make it more difficult to use your home as collateral for additional financing. It can also become an issue when you decide to sell because outstanding claims generally need to be addressed before the buyer can receive clear title.

In certain circumstances, a lienholder may also have the right to pursue foreclosure or other legal remedies to recover the debt.

What Happens When You Sell a Home With a Lien?

Selling a property with an existing lien is possible, but the lien typically needs to be resolved as part of the transaction.

During the closing process, the title company conducts a title search to identify outstanding claims against the property. If a valid lien is discovered, the parties will generally need to determine how it will be paid or released before the buyer receives clear title.

For example, imagine you sell your home for $500,000 and have a $300,000 mortgage plus a $25,000 valid lien. Assuming there are no other expenses or obligations, the mortgage and lien would need to be addressed from the transaction proceeds, leaving $175,000 before other selling costs.

Problems can arise when the sale proceeds are not enough to satisfy all outstanding debts. In those circumstances, negotiations with creditors or lienholders may be necessary.

How Do You Remove a Lien From a Property?

The process depends on why the lien was placed on the property and whether it is valid.

Pay the Underlying Debt

If the lien is legitimate, paying the debt may be the simplest solution. Contact the lienholder to confirm the amount required and ask what documentation will be provided once the obligation has been satisfied.

Negotiate With the Creditor

In some situations, a creditor may be willing to accept a negotiated settlement or establish a payment arrangement. Any agreement should be documented carefully so you understand exactly what is required for the lien to be released.

Dispute an Invalid Lien

If you believe a lien was filed incorrectly or does not represent a valid debt, you may have legal options for challenging it. Because lien laws can be complex and vary by jurisdiction, speaking with a qualified real estate attorney may be appropriate.

Once the obligation has been resolved, the appropriate lien release or satisfaction should be recorded so the public property records accurately reflect the change.

What Homebuyers Should Know About Property Liens

If you're purchasing a home, you generally do not want to discover an unresolved lien after closing. A title search is an important part of the homebuying process because it can uncover claims or other issues associated with the property's ownership history.

If a lien is discovered, the seller will generally need to address it before the transaction can proceed. Depending on the situation and the terms of the purchase contract, the buyer may have options if the issue cannot be resolved.

This is one reason buyers should avoid assuming that a property is automatically free of financial or legal claims simply because it is listed for sale.

Can a Lien Affect a Mortgage?

A lien can potentially complicate mortgage financing, particularly if it creates questions about who has a legal claim to the property or whether the buyer can receive clear title.

For homeowners considering a refinance, existing liens may also need to be identified and addressed as part of the transaction. Your mortgage lender and title professionals can help determine what needs to be resolved before financing can move forward.

This is especially important when there are multiple liens or other title issues involving the property.

Frequently Asked Questions About Home Liens

Does a mortgage count as a lien?

Yes. A mortgage typically creates a voluntary lien against the property. The lien generally remains until the mortgage obligation has been satisfied according to the loan terms.

Can you sell a house with a lien?

Generally, yes, but the lien usually needs to be paid, released, or otherwise resolved as part of the sale so the buyer can receive clear title.

Does a lien mean you will lose your house?

Not necessarily. A lien is a legal claim, but the consequences depend on the type of lien, the amount owed, applicable laws, and whether the debt is resolved. In some circumstances, a lienholder may pursue foreclosure or other legal remedies.

Who can help with a lien on a home?

Depending on the situation, you may need assistance from your title company, mortgage professional, real estate agent, or a qualified real estate attorney.

Understanding Liens Can Help You Avoid Closing Delays

Whether you're buying, selling, refinancing, or simply managing your property, understanding liens can help you identify potential problems early. An unresolved claim does not always prevent a transaction, but discovering one late in the process can create unnecessary delays and complications.

At Premier Plus Lending, our loan officers work with borrowers throughout the mortgage process and can help identify financing considerations that may affect your transaction. For legal questions about the validity or removal of a lien, however, it is important to consult an appropriately qualified legal professional.

If you have questions about how a lien may affect your mortgage, home purchase, or refinance, connect with a Premier Plus Lending loan officer for personalized guidance.