It would be fair to say that the world is becoming much more creative when it comes to settling debts and as you’ve probably already assumed by the title, we’re certainly under the assumption that property liens fall into this category.

Unsurprisingly, this is a notice which isn’t always understood by your Average Joe. It’s something that might be on the tip of everyone’s tongue in the conveyancing office, but other than that it’s a topic which tends to have huge question marks hanging over it.

It’s for this reason that we have put together the following guide. Regardless of whether or not you are a property owner, or a creditor, here’s what you need to know about liens.

How does a property lien affect a homeowner?

The reason why the property lien is becoming so popular is because of the lack of freedom it provides to the owner of the house. In other words, it can immediately make them act upon a debt.

When a lien is attached to your property, it distorts the title that is attached to it. This becomes a huge problem for those homeowners who wish to sell their home as without a proper title, it’s legally impossible to initiate a sale.

Therefore, when a creditor knows that a debtor’s property might be sold in the future, this course of action is naturally appealing to them.

How is a creditor meant to collect from a property lien?

In theory, a creditor could demand that the property is sold via foreclosure so that their lien is paid. However, this is just in theory and because of the mortgage that will have been placed on the property long before the lien was initiated, this has to be paid off first before any other debts can be satisfied. This means that the creditor would then have to manage the repayments of the property; something that very few wish to do.

Rather than opt for the foreclosure route, creditors will often play the waiting game. They can wait until the property is sold naturally and as most buyers won’t agree to a full sale until the lien is cleared, the seller (and also the debtor in this case) will use the purchase price to pay off the lien and settle the arrangement.

How do you know if a lien is attached to your property?

In most cases, property owners will be immediately notified via mail if a lien has been placed on a property. However, because this is usually communicated via snail mail, for reasons beyond the recipients control the documentation can be lost in the post.

It’s for this reason that the authorities have arranged other methods of finding out. The majority have searchable property databases, mostly accessible via the internet. By having your parcel identification number to hand, you will immediately be able to see the status of your property and whether or not any liens have been placed on it.

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