With a real estate agent to assist and a buyer lined up, selling your home couldn’t be any easier!.. is something we wish we could say about every real estate transaction. Unfortunately, property sales are more complicated than this. When prepping your home for sale, you must square away your property’s title, deed and documentation. At this point in the sales process, issues with liens can rear their ugly head. Now you have questions about where a lien came from and who placed it on your home in the first place! Thankfully, with assistance from an experienced real estate attorney, such as those at Essig Law Office, lien troubles can be resolved, and you can continue selling your home.
What Are Property Liens?
A lien is a claim to your property because you owe a debt. A creditor may put a lien on your home to ensure you pay back your debt, and if you do not, the creditor could take your home as payment. If you have a lien on your home, you cannot sell it without paying off the debt tied to the lien. You should not get too worried, though. Not just anyone can place a lien on your home, and even if they have a right, they must go through legal means to do so.
Where Did Those Liens Come From?
The only people who can place a lien on your home without your knowledge are those who have done work or otherwise contributed to the value of your home. For example, contractors, vendors, mortgage lenders, mechanics, and the Internal Revenue Service (IRS) can place involuntary liens if you have unpaid bills or outstanding debts. Other creditors, though, usually cannot put a lien on your property without your consent (known as voluntary liens).
Involuntary liens require going through court to get a lien. A judge must record a judgment of the lien. You should note a judge could issue a judgment lien for any unpaid debt when the creditor takes you to court for repayment.
Examples of some typical involuntary liens include:
- Judgment Liens – Result from a court ruling favoring a creditor in a debt collection lawsuit.
- Attachment Liens – Used by creditors to secure debt repayment and prevent property sale before the final decree of ongoing legal matters (divorce, bankruptcy, etc.).
- Estate Tax Liens – Imposed by the government to secure payment of estate taxes.
- Corporate Franchise Tax Liens – Applied when a corporation has not paid its franchise taxes.
- Federal Tax Liens – The U.S. government’s legal claim against your property when you neglect or fail to pay a tax debt.
- Mechanic’s Liens – Filed by contractors or subcontractors who have not been paid for work performed on your property.
- Utility Liens – Placed by utility companies for unpaid services such as water, gas, or electricity.
How Can You Resolve Involuntary Liens?
If you wish to have a lien removed from your property, you must first square away the amount of debt owed to the creditor that placed the lien. So, if you owe $2,000 to a creditor and that creditor gets a lien on your home, you must pay the $2,000 to get rid of the lien. This process also entails drafting a lien release document, having the creditor sign it, and filing it to be recorded in the county public records.
However, if you don’t have the money to repay creditors, liens can still be removed through negotiation. Often, lienholders are willing to release you from your lien for a portion of what you owe instead of the entire debt.
Or, if you believe an involuntary lien was placed unfairly or in error, you can challenge the lien in court. If such is the scenario you find yourself in, reach out to Essig Law Office ASAP, and we can assist in getting your involuntary liens resolved. We are Washington, Morton, Peoria and East Peoria’s preferred attorneys for real estate law and property closings in Central Illinois. If interested in our legal services, contact Essig Law Office today at 309-444-8041.
