Purchasing Property Securely And Cleanly - Understanding Types Of Real Estate Liens

27 January 2015
 Categories: , Blog


Owning and maintaining your own home or other piece of property can be extremely rewarding, but it is not without its challenges. In fact, the process of researching and purchasing your real estate can be particularly difficult, as hidden pitfalls may trip you up and end up costing you significant sums to overcome.

Below, you'll find a guide to various types of real estate liens. With this information in mind, you'll have a better idea of the challenges you may face, and you can go in to the property-buying process better informed. Your communication with your real estate lawyer can focus on relieving these liens, leaving you free to enjoy your property as much as possible.

Property Tax Liens

Whether it's because of a miscommunication with their mortgage company or a simple inability to pay, property taxes often go neglected. When this happens, the taxes are generally paid by private investors at a penalty rate, establishing a lien on the property that must be relieved before the title can be transferred.

Property tax liens are one of the most expensive and also most important types of liens to handle, as they can result in property seizure. They also follow the property rather than the property owner, so you should be aware that if you purchase a property with back due taxes you'll have to pay them in full.

IRS Liens

While less common, liens from the Internal Revenue Service can be levied on home owners who have neglected to pay their share of income taxes. These often occur after protracted warnings and sometimes legal battles, but when they are in place, they can make the transfer process difficult.

The owner of the property will likely be forced to disclose an IRS lien to you during the purchase process. Your real estate attorney will be able to provide you with specific advice, but in some cases, a percentage of your sale funds will have to be diverted directly to the IRS to satisfy the lien.

Mechanic's Liens

If improvements have been done on a property and the craftsman hasn't been paid, a mechanic's lien may be levied. As with property tax liens, these penalties stay with the property unless there is a judgment made in a civil court. These can be potentially damaging to your real estate purchase, as in some cases, a contractor may attempt to undo some of their work. Once the lien is disclosed, it's important that you and your lawyer, one like Valentine & Valentine PC, do your part to make sure it's relieved on your purchase.