A property lien is a legal claim placed on real estate as collateral for an unpaid debt. In California, liens can stem from unpaid taxes, contractor work, or court judgments. If you are a homeowner, buyer, or seller, understanding how liens impact property transactions and how to resolve them is crucial. This guide from Alex Knaub & Associates explains the types of liens, their effects on property sales, and legal strategies for removal.
What is a Property Lien?
A property lien is a creditor’s legal claim against a property, ensuring that debts or obligations are paid before a sale or refinancing can proceed. Liens fall into two main categories:
Voluntary Liens: These are willingly agreed upon, such as a mortgage.
Involuntary Liens: These are placed without the owner’s consent, often due to unpaid debts.
Types of Property Liens in California
Understanding the different types of liens can help property owners avoid legal complications:
Tax Liens: Imposed by the state or federal government for unpaid taxes. The county tax collector can initiate a lien if property taxes remain unpaid.
Mechanic’s Liens: Filed by contractors or suppliers who have not been paid for work performed. In California, these must be filed within 90 days of job completion.
Judgment Liens: Result from a court ruling in favor of a creditor, allowing them to place a claim on the debtor’s property until payment is received.
How Liens Affect Property Sales
If you are buying or selling property in California, a lien can significantly impact the transaction:
Cloud on Title: A property with a lien cannot be sold or refinanced until the debt is resolved.
Negotiation Requirement: Sellers must negotiate with lienholders, which can delay the closing process.
Foreclosure Risk: Unpaid liens can lead to foreclosure, resulting in the loss of property.
Checking for Liens on a Property
Before purchasing a property, conduct a lien search using the following methods:
Title Search: Performed by a title company to reveal existing liens.
County Recorder’s Office: Search property records online or in person for recorded liens.
Property Tax Records: Verify outstanding taxes with the county tax assessor’s office.
Mechanic’s Lien Search: Use the California Secretary of State’s website to check for contractor claims.
Legal Solutions for Removing a Lien
If a lien is discovered, several legal remedies can help resolve it:
1. Pay the Debt
The most straightforward way to remove a lien is to settle the debt. Once paid, the lienholder must file a lien release with the county recorder’s office.
2. Negotiate a Settlement
Many lienholders are open to negotiating a reduced payment or structured repayment plan. Ensure all agreements are documented in writing.
3. File a Lien Release
After payment or settlement, ensure that the lienholder officially removes the lien by filing a release document.
4. Quiet Title Action
If a lien is disputed, a quiet title action can be filed in court to clear ownership rights. This legal process is useful when a lienholder refuses to remove an invalid claim.
5. Challenge the Lien
If you believe a lien was wrongfully filed, you can challenge it in court. An experienced real estate attorney can help prove the lien is invalid or improperly recorded.
Preventing Property Liens
To avoid liens and protect your property, consider these proactive steps:
Pay Taxes and Debts on Time: Keep property taxes and mortgage payments current.
Vet Contractors Before Hiring: Ensure payment agreements are clear to prevent mechanic’s liens.
Conduct Regular Title Checks: Periodically review your property title for any unexpected claims.
Obtain Title Insurance: Protect against undisclosed liens when purchasing property.
Contact an Experienced Real Estate Attorney
Property liens can create significant legal and financial challenges. Whether you are dealing with an existing lien or want to prevent one, Alex Knaub & Associates can provide expert legal guidance.
📞 Call us at 951-923-2539 to discuss your case and explore your legal options.