A lien can be placed on your property if you have any outstanding debts. A real property lien is a legal claim that the creditor attaches to your property. It will specify the amount you owe and grants the creditor the right to be paid out if and when you sell the property. Under certain conditions, the creditor can take possession of your property if the debt is not paid off within a certain timeframe.

A common situation where liens come into play is with ownership of a house. The majority of people take out a mortgage with a bank or lender to pay off their home. However, if you fail to make your mortgage payments, the creditor will have the right to place a mortgage lien on your property.

This lien will typically be filed with your county recorder’s office. If the debt is not paid, then the creditor may also decide to foreclose on your property. Another common piece of real property that a lien can attach to is your automobile.

When dealing with real property, you can discover if a lien is present by performing a simple title search. For purposes of selling or refinancing a home, it is important to remove a lien after a debt has been fully satisfied. Clear title is required before you can sell or refinance your home.

If the seller has any outstanding liens on the property, a buyer can back out of the home purchase even if the buyer is already in contract to buy the house. Banks and lenders also will not generally provide a mortgage to a new buyer until all liens on the property have been removed.

What Options Do I Have for Removing a Property Lien?

Removing a lien from your property can be a complicated process. If there is a lien on your house, it can prevent you from selling your home until the lien is removed. Below are various options you may have available to you to remove the lien from your property:

  1. Satisfy the debt that you owe. If you pay off the balance of your debt in full, you can file a “Release of Lien” form. This will act as evidence that the debt has been paid and effectively remove the lien from your property. While you should check your jurisdiction’s specific requirements, the following generally needs to be completed:
    • Obtain the Release of Lien form from your local county clerk’s office;
    • Fill the form out completely by providing information about the lienholder, borrower, property description, address and any other required information;
    • Show proof that the debt was paid in full (such as a copy of the checks or payment statements from the creditor);
    • Have the Release of Lien form signed by the lienholder/creditor in the presence of a notary public;
    • File the Release of Lien form with the county recorder’s office; and
    • Pay any required fees to complete the filing.
  2. Obtain a court order removing the lien. If the lien was obtained through fraud, coercion, bad faith or any other improper means, you can ask a judge to remove the lien from your property.
    • This may be hard to prove, so be sure to have clear proof of improper behavior if you choose to make this request. Doing so will increase your chances that a judge will issue the court order.
  3. File for Chapter 7 Bankruptcy. If you file for bankruptcy to remove the lien, this is referred to as “lien avoidance.” The lien will be removed and you can keep possession of your property. This is because if you file under Chapter 7, you can generally discharge the majority of your lien and debt obligations.
    • Keep in mind that this is only proper with certain liens (usually judicial liens) and may sometimes be enforceable for a limited amount of time, such as during bankruptcy proceedings.
    • You also should become educated on the effects of filing for bankruptcy before making a decision to do so, such as the inability to receive lines of credit for a certain period of time.
  4. Privately negotiate resolution of the lien with the creditor. Working out a settlement agreement to remove a lien with the creditor is always an option, if both parties agree.
    • This can typically be accomplished through arbitration, mediation or informal negotiations.
      1. For example, a creditor may agree to remove the lien if the debtor agrees to pay higher monthly payments and a higher interest rate on the mortgage.
  5. Wait for the statute of limitations to run. This does not usually require any effort on behalf of the debtor. Your state will have a law setting limitations on how long a lien is valid as well as how long a creditor has to file suit after the debtor defaults. If the required period of time passes, the lien can be removed and viewed as unenforceable.

Do I Need to Hire a Lawyer to Remove a Property Lien?

If you have a lien on your property and wish to have it removed, contacting a local real estate lawyer is a good idea. A lawyer can review the terms of your lien and present you with any available options to remove the lien.

Remember, this will vary depending on your situation and state laws. Additionally, a lawyer can represent you in court and make sure all necessary filings are completed correctly. A lawyer can also negotiate with your creditor to remove or lower your lien amount.