What Is A Property Lien?

A lien is a financial claim that provides security for a debt. In real estate, liens can take various forms. The mortgage is by far the most common lien in real estate. Once the mortgage is filed with the Clerk, it is notice to the public that the property is encumbered by this debt that runs with the land. If a Buyer purchases a property with an open mortgage, this mortgage will remain as a lien/security interest on the property until it is paid off and the lender files a Satisfaction of Mortgage with the Clerk.Your lender or mortgage servicer will provide a payoff statement so that the mortgage can be paid in its entirety at the closing. The payoff statement will take into account the principal and interest owed and calculate the payoff amount down to the penny, so when your property is sold, a check or wire transfer for that exact amount will be transmitted to the lender and satisfy this outstanding debt. Mortgage payoffs are generally straightforward and non-negotiable. It is usually quick and easy to obtain a payoff statement by calling the lender’s customer service number and requesting one. The payoff date is usually 2-3 business days after the closing if being paid by a bank check or the same day or next business day if utilizing a wire transfer.

Tax liens are another common issue. A homeowner may have fallen on tough times and owes back taxes to the IRS, New York State, or a local municipality. Once these liens are filed with the Clerk, the liens attach to the debtor’s real estate and must be paid off or resolved before the property can be sold.

Money judgments against a homeowner resulting from a lawsuit or settlement that are filed with the County Clerk also become a lien on the property and must be addressed prior to the closing.

Mechanics liens are liens that contractors can file with the County Clerk in the land records when they perform work on a property, but the homeowner does not pay the contractor for its services. These liens must be addressed if they are identified on the title report.

Often, a homeowner may be able to negotiate a reduced payoff from the creditor or lien holder. Your real estate attorney may be able to assist you with these communications and negotiations with any lien holders. If you are planning to sell your home and you are aware of any liens or potential liens on the property, it is smart to contact your creditors and begin negotiating reduced payoffs well in advance of the contract or the closing. Your Purchaser may not be willing to sit out a long and uncertain process for a home whose title is muddied. Tackling these issues early should help ensure that these liens will not cause any delays or issues and help you get to the closing table as soon as possible.

For more information on Lien Against A Property In New York, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (800) 619-3570 today.