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Liens: Stopping home sales and slowing the buying process

If you are interested in purchasing a property, one thing you need to do is to make sure there are no liens on the property. A property with a lien against it cannot usually be sold without satisfying the lien since there are complications that could come with a sale.

There are several kinds of liens that could be placed against a property. One is a mortgage lien. This lien is a security interest against in the property. If the person who is selling the home tries to sell it before being able to satisfy the debt to the mortgage company, the lien will show up on the title as a cloud. The lien then allows the lender to claim a portion of the sale proceeds to satisfy the loan before releasing the lien and allowing the sale to continue. If the money coming from the sale is not enough to satisfy the lien, the sale may not continue.

Another kind of lien, a contractor's lien, is different. This is also known as a mechanic's lien or construction lien. It is a claim made by a contractor that states that they have completed work on a property but not yet been paid. If you attempt to buy a house that has this type of lien on it, the sale price again has to satisfy the lien for the mortgage and the lien for the contractors. If it's unable to do so, then it is likely that the sale will fall through unless the seller can get enough money to cover the difference.

Liens are like a safety net for those who do work for others or who lend money. With a lien, it's possible to stop a sale from taking place, which could transfer a home out of the original owner's possession and make it harder for the mortgage company or contractor to obtain the money they're owed.

If you are trying to buy a property, understand that the seller may not know about a lien. A title search should be performed well in advance of a sale, so that you know the title is clear. If there is a cloud on the title, it needs to be addressed before the sale will move forward. This slows down the purchasing process and could mean that the sale will fall through completely, depending on the amount of money that is owed to those with a lien.

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