When it comes to personal property like a house or a car, a bank or other creditor will attach a notice (or a lien) to the property that tells the world, “someone owes me money on this!” Usually filed within a county’s records, a property lien is a common way for real estate stakeholders to make sure that they are paid in full for a certain piece of property. In the world of homebuying, it’s very important for buyers and sellers to make sure that a home doesn’t have any residual property liens on file with the county.

Here are some ways a lien can impact your property…

How are property liens used?

A property lien is usually granted to a bank or creditor as part of repossession of a real estate property. This will be the first step a creditor can take to take back a property if someone isn’t paying what they owe. A lien acts as a pre-action notification to the homebuyer/borrower that an action is about to be taken. If a lien goes unaddressed, a levy is put into effect where the property is actually taken back from the homebuyer/borrower.

What happens if you buy a property that has liens?

It’s important to make sure you’re aware of property liens before you make a final decision on the purchase of a new home. A property lien does not automatically mean the deal is off, and if you have the right title agency, you can get help planning next steps.

Remember, liens impact the current owner of the property, not the buyer. If you do find a lien on a home you want to buy, don’t panic. It’s possible that the lien has already been paid off, so the owner will just have to get a lien release — a document that proves the old debt has been paid.

If a lien hasn't been paid, you’ll need to figure out who is responsible for covering the remaining cost. Sometimes, this means that the current owner may ask you to split the cost, or you may have to walk away depending on how big the unpaid debt is. This is why having title insurance is important when buying a home — the liens are already covered!