So you’ve received a lien against your property, what does that mean and what should you do?
Essentially, a lien is a form of collateral used against a borrower in an effort to either recoup a debt or discourage future payment defaults. Liens are established through voluntary contracts or by legal judgments. For the latter, generally, a delinquent debtor after being taken to court will have a money judgment issued against them; after further failing to pay the debt owed, a real estate lien will be placed on their property. The court order on the property means that the lender will now be paid back directly out of the refinance or sale of the home.
Unfortunately, a lien can be problematic for a seller because it attaches to the legal title of the property, this can make purchasing a property difficult for potential home buyers as mortgage companies conduct title searches and could thus refuse to finance the purchase of a house with a lien connected to it. Additionally, the lien holder can bring foreclosure upon future property owners. Buyers generally are not going to be willing to take on someone else’s debt, further boxing in the debtor. In California, a judgment lien remains attached to the property for ten years.
Liens usually stem from property taxes, mortgage payments, HOA fees or debts to contractors who performed work on the property.
Liens are paid on a first come first serve basis, meaning, payment goes to the lien holders in the order they were placed on the property. A common falsehood about liens is that a bankruptcy filing will make a judgment lien disappear; in fact, the opposite is true. A bankruptcy will expedite lien collections, as the lien holders are the first creditors paid after a filling.
The good news is that a lien can be removed from a property. The easiest way to rid your title of the lien is by satisfying the debt. Once the payment is received the lien will be cleared. Legally, if the lien was placed fraudulently or unlawfully a court may order it away. Furthermore, a creditor who makes illegal demands for payment such as threats risks having the lien removed by a court as punishment.
For property owners that are “upside down” and lack equity to sell, click here. Our services are provided at no out of pocket costs for homeowners; and veterans and service members can use their VA loan benefit again in the future to purchase a home.
IMPORTANT NOTICE:
If you choose to have VA Home Loan Centers represent you in selling your home as a short sale, you can stop using our services at any time. VA Home Loan Centers charges no up-front fees to assist you with your short sale. Our partner real estate brokerages will charge a real estate commission but if the bank agrees to a short sale, this is paid for by your lender. VA Home Loan Centers is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change the terms of your mortgage including approving your short sale. It is recommended that you continue to make payments on your mortgage throughout the process. Should you default on your payments, you can see a negative impact to your credit report and your home could be foreclosed upon.
