A lien on your property isn't really a problem until it becomes one. You can live in your home without even knowing there is a lien. Then, one day you decide to sell your home. When a potential purchaser finds the lien, the problems materialize quickly.
The creditor who obtained the lien may have a legal right to take your property and sell it – rather than you sell it. The sale is meant to repay the debt you owe the creditor.
It's important to know, too, that it is not just the mortgage lender who can obtain a lien on your home. Multiple other creditors can obtain a lien. And it is first come, first serve – the creditors are lined up according to who first obtained a lien. Common creditors who obtain liens or sources for liens on homes include:
- mortgage lenders
- auto loan lenders
- Internal Revenue Service (IRS).
When you take out a mortgage loan, you agree to repay or else allow the lender to foreclose on the home. Mortgage or home loan lenders are really the only entities that can force you out of your home.
Contractors who are hired to work on your home cannot force you out if you fail to pay them, but they can obtain a mechanic's lien. This lien is filed with the county recorder's office.
Likewise, when a judgment is awarded after a lawsuit against you, the creditor may obtain a judgment lien against your home or property if you cannot pay the court-ordered amount immediately. The lien is meant to secure payment of damages for the plaintiff of the lawsuit when you can't pay out of pocket.
Finally, a lien may be imposed by local governments or the IRS as a means – like with judgments – to ensure unpaid taxes get paid eventually if you can't pay it now out of pocket.
How can a New York property owner prevent problems associated with liens?
If you can't pay the debt or mortgage payment, then you can't pay. But if you want to benefit from the sale of your home, you need to somehow take care of the debt to release the lien. If not, then you are stuck with the property unless the mortgage lender moves to foreclose. If so, then you need to get yourself a skilled New York foreclosure defense lawyer. If not, then try the following:
- Somehow find the money to pay the debt. Not mentioned yet is this: if you are going to pay the lien off via profits from the sale of the property, then you can sell the property. The problem is: when the potential buyer learns of the lien, it may scare him or her off.
- Review the lien and make sure it is legitimate. Though unlikely, things fall through the cracks and errors are made, and that may be the case with the lien on your property.
- If you find an error or don't believe the lien is legitimate, dispute it. Legal action may be necessary to determine if the lien is valid or not.
If you have a property with a lien and want to sell the property, you may benefit from legal counsel. Likewise, if you are a buyer and want to purchase property with a lien on it, be sure to consult with an experienced real estate attorney. Though liens can cause problems, they are not problems that can't be solved.