Lien is a legal claim against your property because of an unpaid debt. They are generally placed against properties such as homes, cars, etc., by the creditors to protect their investment. It not only clouds your name on the property title but gives the claimant a portion of your home. The claimant can sell their portion to clear what’s owed or even forceclose a sale at their own discretion.
Owing to the old saying, “it takes money to make money,” you might have heard that sometimes debt’s good. For example, if you aren’t rich, you can take out a mortgage and invest the rest of your money in your future while also building your credit. However, that’s not always true; debt can be terrible when it comes to liens on your home.
It’s also noteworthy that there are a few cases when the creditor wrongfully places a lien on the property even after the payment.
In the first case, you can possibly find yourself in legal trouble that might end up with you losing your home if the lien’s not appropriately handled. On the other hand, you can easily remove a property lien without spending a truckload of money with a few simple steps in the second case.
In this guide, I’ll explain everything you need to know about property lien and the removal process, starting with how to check and confirm the lien on your home.
How to check if a house has a lien on it?
Even though one can file a lien without notifying the homeowner, the claimant can’t take action without legal notice. Since the lien claims are to be filed and approved by the court, they are available in the public domain. You can even check lien on someone else’s property because of the transparency of these claims.
To check if your house has a lien on it, you need to visit your county recorder or clerk or check the assessor’s office online using the residential address. Searching for lien claims is absolutely free of cost.
You might have to pay a small fee if you need a hard copy of the report, but that’s secondary. Here’s a list of the clerks and assessor’s offices in Georgia county. Visit this link for counties other than Georgia.
While you can hire a company to check the lien claims for you, I recommend doing it yourself since it’s not that big a task, and you’ll save some extra bucks by doing so. We’re happy to help with this process as well.
In fact, it’s considered good practice to visit your county recorder or check the assessor’s office before buying a house to protect yourself from any unwanted surprises.
There are three basic types of liens against any property.
Statutory Liens
They’re usually tax liens that you owe to the International Revenue Service (IRS) if you haven’t paid your state or federal taxes. You can also get a tax lien from non-payment of property and estate taxes.
Other statutory liens include a mechanic’s lien that the creditor can claim if you don’t pay the contractor company after housework or maintenance.
Consensual Liens
As the name suggests, these happen with the consent of both the debtor and the creditor. They are claimed when you borrow money.
Judgment Liens
Judgment liens are placed on your property when a court rules in favor of the creditor (or claimant) in a lawsuit against you. The creditor can file these lawsuits at the local county court to “protect their investment” without notifying you.
How to remove a property lien in Atlanta?
Scenario I: The Debt is Paid
If your debt’s already paid, then you’ve already done half the work. But even though your debt is settled, it doesn’t mean that your lien is as well. To get the lien removed, you can do either of the following:
Release-of-Lien Form
You’ll have to get a release-of-lien form, fill it correctly, and have it signed and stamped by your lien-holder (or creditor) in front of an authorized notary. Submit that form to your county recorder’s office for a small fee.
Get a court order
In some cases, the lien-holder wrongly places a lien on the property or refuses to sign the release form. A judge in your county can issue a court order to get the lien removed if you can prove that the lien is no longer valid.
Scenario II: The Debt isn’t Paid
If you haven’t paid the entire debt, you’ll have to either pay what’s due or jump many legal hurdles before the lien is removed. Here’s what you can do –
Pay What is Due
The ideal way of removing a lien is paying what’s owed. If you can’t pay everything in one go, you can negotiate a partial lien settlement depending on how much you can afford and how low the creditor can go.
You can also claim with your title insurance company if you got one during the purchase of your house. They’ll help you out in negotiating a reasonable deal with the lien-holder.
Release-of-Lien Form / Get a Court Order
This process is the same as I explained previously. If your lien-holder agrees with you, get a release form. If they don’t, get a court order.
Run Out the Statute of Limitations
It’s also possible to wait out on your lien until it expires, provided that the creditor doesn’t foreclose on your property in the meantime. Every state has its laws and regulations regarding the filing period and statute of limitations.
In Georgia, you must file a lien claim within five years of the transaction, and the lien expiry period is ten years from when the lien was issued.
Lien Stripping
Lien Stripping is a convenient process and a part of Chapter 13 Bankruptcy. In layman’s terms, if you have more than one mortgage and the property value of your home is less than even the first mortgage alone, you might be able to ‘strip down’ or waive off your entire second mortgage.
However, the eligibility criteria is pretty tricky. You’ll need professional help to check your eligibility and prepare everything to pass the criteria.
How to sell a house with a lien on it?
You can sell a house with a lien on it. It’s pretty similar to the home-selling process with a couple of extra steps. Remember that you aren’t required to settle the debt upfront, and you can even negotiate a partial or complete release of the lien.
Whether you cannot keep up with the mortgages or just move away, settling your debt and selling your house can be a little tricky, but it’s possible. The home buying-selling process is quite excruciating as is, and if you add settling the lien with your creditor (or lien-holder) on top of it, it’s a pain.
If you have already decided to sell your house, you can settle your debt for pennies on the dollar. KABOOM, right? Just like a traditional home buying-selling, you’ll breeze through the settlement process quickly, given you receive the proper guidance. For your ease, I have divided the process into three simple steps.
Step 1: Evaluate your liens
The first step to any successful transaction is knowing your assets and liabilities properly. Follow the steps I explained earlier and check the ongoing lien claims on your property or yourself. Once you’ve made a list, it’s time to understand your debt and take action.
Step 2: Get expert help & contact the creditor
So far, I’ve been asking you to take things into your hands, right? But for this step, you’re going to need professional help. Be wary of who you hire; your end goals and feelings must resonate with your ‘legal’ expert since they’ll be the point of contact with your lien-holders.
Since your lien-holders (or creditors) know the process, they might try to exploit you. You can avoid that by getting professional help like JWS Acquisitions. With my decades of experience with buying and selling houses in Atlanta, I’ll be able to help you reach your best deal possible.
After hiring professional help, you need to understand your liens and differentiate between negotiable and non-negotiable liens. Next, have your expert talk to the creditor and cut a deal for the lien settlement.
Step 3: The Traditional Buying-Selling Chase
The last step is the property selling process. Here’s my complete guide to selling home easily and fast.
You can also sell your house if the lien is more than the property value IF you properly negotiate a partial release of your debt.
Can someone put a lien on your house without you knowing?
Unfortunately, yes.
The creditor can place a lien on your property without notifying you. It can happen because of a settlement or a decision by the court in favor of the creditor to protect their investment.
Let me explain…when you buy a house with credit, the creditor can appeal to the court for protection against their credit (“a lien claim”), and if they “win the lawsuit,” they recieve a “certificate of judgment.”
This certificate can be submitted to a land records office for the lien claim without telling you, and the only way you’ll know about this is if you intentionally check the lien on your house or try to sell/refinance it.
Does lien affect your credit score?
For the most part, it used to.
A property lien can affect your credit score because it’s proof of a legal action taken and ruled against you from an unpaid debt. Liens such as tax lien or mechanical liens are a part of your ‘payment’ history. So, they can be included in your credit card report.
However, not all liens will affect your credit score in the wrong way. If you’re paying your mortgages on time, it’s no different than having a credit card. In fact, it might end up increasing your credit score.
Investopedia also reported that three major credit companies (Equifax, Experian, and TransUnion) stopped using Tax Liens in their credit reports because of the inconsistencies since April 2018. Liens like tax liens can stay on your credit report for up to 7 years even after you’ve paid them in full. So, it creates a false image of the individual even if he or she is financially capable.
Liens aren’t inherently bad, but rather, they’re a representation of your debt. If you slip up once, it can cost you more than what you initially owed. I recommend clearing up your non-mortgage liens as fast as you possibly can, regardless of whether the debt is paid or not.
If you need any help with clearing up your liens, you know where to find me. I’ll be happy to help you out.
