When you’re buying or selling a property, a lien can cause unexpected delays. A lien is a claim against a property that must be cleared before a clean title can be transferred.
Understanding the common types of liens can help prevent delays at closing. Below is some key information on the different types of property liens.
Mortgages are the most common home liens
Most homes are purchased by getting a mortgage, which is actually a lien. It gives the lender the right to the property if the borrower defaults. Before the property can be sold, the mortgage must be paid off in full. At closing, this is usually done using the buyer’s funds.
Tax liens can delay or block a sale
If a property owner fails to pay property taxes, the town or city can place a lien on the property. This lien must be satisfied before the sale can go through. The same applies to federal tax liens from unpaid income taxes. These liens take priority over other claims and can cause significant delays if not resolved.
Judgment and mechanic’s liens
A judgment lien may be placed on a property after a court awards money to a creditor. Mechanic’s liens, on the other hand, come from unpaid work or materials supplied by contractors. In Connecticut, contractors must follow specific steps and timelines to file these liens, but once in place, they can prevent the transfer of a clear title.
Before closing, a title search can uncover any liens on the property. Seeking legal guidance will help ensure that your real estate deal goes smoothly.