A lien is a legal claim against real property that serves as security for the payment of a debt or other legal obligation. In California, a real estate lien can be placed on real property by creditors, government agencies, or other entities to ensure that an outstanding financial obligation of the property’s owner is paid.
A legal consultation in California with a California lawyer would help a person understand liens and removing a lien from a house, if that is the type of property on which a lien has been placed.
When a lien is recorded on real property, it affects the title; it restricts the owner’s ability to sell the property or refinance a mortgage loan until the debt is paid off. Liens are often used by contractors, subcontractors, and suppliers who have provided the labor and materials to a construction project on a parcel of real property.
This allows them to recover what is owed to them by the owner of the property. This type of lien is known as a “mechanic’s lien,” a special type of lien that is meant to secure payment for a contractor who works on real property.
If the owner of a property hires a contractor to remodel or repair their house or build an addition onto their residence, for example, and the owner fails to pay the contractor, the contractor can file a lien on the property in order to recover the money they are owed.
Consensual property liens arise when a debtor consents to the lien, for example, with a loan or a line of credit. Consensual liens may also be used for mortgage loans when the borrower agrees that a lien can be placed on the property to guarantee repayment. A debtor might also agree to secure a loan that is not taken out to purchase the property but to use for other purposes. But the goal is the same – to secure repayment of the loan.
What Happens When There Is a Lien on My Property in California? How Do I Find Out if My Property Has a Lien?
There are a number of ways for a person to search for liens on the real property they own. The best option will depend on how much time, money, and information you have and whether you’re looking for a specific lien or all possible liens.
- Local Government Records: The county recorder in the county in which a property is located or the local courthouse in the county can help a person check for liens on their property. A person may be able to search records online, submit a request by mail or conduct a search in person.
- Credit Reports: The existence of a lien on property may be reported to the credit reporting agencies. A lien might appear on an individual’s credit report. For example, a child support lien may be one that can be reported to a credit reporting agency. An individual may review their credit reports at no charge. They would want to check the public records section of each report for reports of liens.
- Title Search Company: Working with a title search company may be the most direct way to check for property liens. A person can hire a title search company, and it does a complete search. There are many title search companies and people usually hire them to conduct searches during the closing process of the sale and purchase of residential real estate.
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How Do You Remove a Lien From Your Property in California?
Removing a lien may involve taking legal action, negotiating a settlement or simply paying off a debt. The first step is to determine whether the lien is valid. There are specific legal requirements that must be followed in placing a lien on real property under California law, and if they are not respected, a lien might not be valid. For example, there are specific rules regarding mechanic’s liens and judgment liens, among others. If the lienholder had not followed the rules, then their lien may be one that can be removed.
If a lien is not valid, the owner of property may file a petition for release in a California court in the county in which the property is located.
Liens may also expire. For example, a judgment lien remains in effect and is enforceable for 10 years from the date of entry of the judgment. It can be renewed, but if it is not renewed, it becomes unenforceable.
Mechanic’s liens must be enforced through foreclosures initiated within 90 days of the date when it is recorded. If it is not enforced within the time allotted, it becomes invalid.
If a lien is invalid or has been satisfied, a debtor may ask the lienholder to give them a voluntary release. While lienholders are not obligated to remove a lien unless the underlying issue, e.g., payment of a debt, has been resolved, they may agree to do so if the lien was not imposed on the property fully as required. Or, of course, they should agree to remove a lien if the debt it secures has been paid.
If an agreement is reached, the lienholder must file a lien release document with the county recorder’s office in the county in which the property is located. For mechanic’s liens, the lienholder must file a “Release of Lien” form for removal. Failure to remove a lien securing a loan that has been paid can lead to penalties for the creditor, including liability for damages.
If the lien holder refuses to remove a lien, a person may need to apply some pressure. They could have a California attorney send the lienholder a demand letter requesting their compliance with California statutes. If the lienholder ignores the demand letter, the property owners would then have to file a petition in the court in the county where the property is located to compel release of the lien.
Many liens arise from debts that have not been paid. If the debtor pays the debt, the lien would be removed. Of course, a debt can be paid in full, but a debtor might be able to negotiate payment of an amount that is less than the full amount. Creditors may accept a lesser amount if they understand that collecting the full amount owed is not likely. A debtor might prove that their financial situation does not allow payment of the full amount.
Any settlement agreement regarding payment of a debt that is secured by a lien reached by a debtor and a creditor should be documented in writing to ensure that the lien can be removed.
For tax liens, the California Franchise Tax Board (FTB) and the federal Internal Revenue Service (IRS) are usually willing to offer payment plans, e.g., installment agreements. Under California tax law, the FTB cannot take action to enforce a lien as long as a debtor pays per an installment plan.
Federal tax liens can be paid in two ways. The taxpayer may arrange to pay under an installment payment plan. Or they may offer a reduced amount. If the IRS accepts the reduced amount, the IRS and the taxpayer agree to an “Offer in Compromise.” When the tax debt is paid, the IRS issues a lien release, usually within 30 days. The lien is then removed.
Judicial lien laws require the debtor to pay the judgment amount that they owe to the creditor who obtained the judgment if the lien is to be removed. Once a judgment lien is paid, the creditor must file an “Acknowledgment of Satisfaction of Judgment” with the court. If a judgment creditor fails to do so, the debtor can petition the court for an order acknowledging the satisfaction of the judgment.
Child support liens are handled by the California Department of Child Support Services. They are removed when they have been paid in full.
Finally, an individual can file for bankruptcy to remove the lien. However, bankruptcy is only useful for removing certain liens. Judicial liens are a type of lien that a person may be able to remove in bankruptcy. In addition, bankruptcy might only delay enforcement of a lien in some cases. If a person has a lien or liens on their property and wants to know if bankruptcy would help remove them, they should talk to a California bankruptcy attorney.
Can You Have a Lien on Other Types of Property?
Generally, liens are used to obtain payment of a debt owed by the owner of real property. Liens can be placed on motor vehicles also. They are usually used in connection with auto loans. An auto lien means that the entity that loaned a person the money to buy their car may take it from the person if the person does not make payments on their loan. This is known as repossession.
Do I Need a Lawyer for a Lien on My California Property?
If someone has placed a lien on your real property, you want to talk to a California foreclosure attorney. LegalMatch.com can put you in touch with an experienced lawyer. Your lawyer can find out if there are liens on your property and then develop a plan to get them removed. If negotiations are necessary, your attorney can handle that for you and get the best deal on offer from your creditor.
