Lien Problems and How a Professional Title Insurance Company Can Help
In our previous post, we discussed some of the things that you could learn from a title search. One of the most important things to look for during a title search is liens. Today at The Group Guaranteed Title, we want to further explain what liens are and provide some more insight as to how they can cause problems when it comes to buying or selling a property.
What Is a Lien and What Does It Do to a Property?
Liens are debts that are directly linked to the property, they are usually acquired by the owner after they failed to pay off a service, loan, credit or any other type of payment owed. The creditor or the person that provided the services can file a claim for the amount owed and the claim for that amount is attached to the property of the person who owes it. There are different types of cases and situations in where this might happen. In some cases the amount owed may lead the court to sell the property in order to pay off the debt, in other cases the debt must be paid in order to be able to sell the property. Usually, if the owner cannot fulfill the payment or refuses to do so, the court will foreclose the property selling it to complete the payment. A lien may limit the ability to sell the property or reduce its value but it normally does not completely make it untransferable.
What to Do If a Title Search Displays a Lien
Title searches normally display the liens that may be attached to the property. The title of the property may show that the current owner is rightfully the owner but it doesn´t really help when there is a substantial debt along with the property. In these cases, it is best to count on the advice and guidance of a professional title insurance company who can enlighten the situation so both parties can head in the right direction. Allow The Group Guaranteed Title, to assist you in your title insurance needs and let your real estate transaction become a satisfactory process for both sides, contact us today.
Mechanic Liens Are Among the More Common Types of Lien
When it comes to liens, one of the most commonly encountered type is called a construction lien, commonly referred to as a mechanic’s lien. When a homeowner has certain areas of the home renovated or fixed, or there is any type of construction job being done at the home, there must be a contract between both parties that states the amount owed for such job and by when it needs to be liquidated. If the homeowner fails to complete the payment the contractor can file a lien on the property so that the payment can be fulfilled.
How Does a Contractor Lien Arise and How Can This Be Avoided
The problem with many contractor liens is that not only can a contractor file a claim on the property, so can the subcontractors and even material suppliers. This means that even if the owner liquidated the payment and didn’t owe the contractor anything anymore if the contractor did not pay the subcontractors or material suppliers, they can place the lien on the property. To avoid this, it is crucial that the final payment is handed until a release-of-lien form is signed stating that all services have been paid off, and no lien can be filed in regard to those services. Now, it is very rare, but it has happened that the owner trying to sell the home had some last minute repairs done to the home and refused to pay them off, and by the time the lien was filed the new owners would be stuck with the debt. Some title insurance policies may not cover this as it is a problem that arises after the policy issue date and after closing, however, there are some more extended coverage policies that may be able to alleviate the problem. Talk to a title insurance professional about what your title insurance covers and select the type of title insurance policy that is best for you.
Better Real Estate Transactions With the Right Title Insurance Company in Larimer County
There are several other reasons why a lien may be placed in a property, these vary from anything such as a divorce decree or unpaid child support to creditors and other loans that are owed. A court ordered lien must be paid off and the money secured before the property can be sold. If you are in the process of buying or selling your home, make sure you are well aware of any liens or debts that may be bound to your property. Call us today at (970) 613-4364 and let us show you how we can help.