3 ways to see if a property has a lien on it
Clearly, it's important to check for liens before you put your hard-earned money into a property. But how? There are three ways:
1. Check county records
Liens are typically a matter of public record, so it's just a matter of getting in touch with the county recorder, county assessor, or county clerk's office where the property you're considering is.
The process will depend on the county, but in many areas, you can simply search property records on the assessor's website (all you need is the address). In more rural areas, you may need to physically visit the office, call them, or head to the county courthouse for records.
2. Work with a title agent
Another option is to work with a title agent. These are experts in property titles and know how to locate liens, pull property records, and document the full history of the home and its title.
You can also purchase title insurance through this agent if your lender requires it. This protects them in case a title issue comes up later on.
The one downside of using a title agent is that it comes with a fee -- usually around a few hundred dollars.
Online title and property lien search tools are offered by companies like Property Shark, U.S. Title Records, and Courthouse Direct. Keep in mind these also come with a fee (it will vary based on the company and where your property is located).
Can you buy a property with a lien on it?
Though homes with liens on them technically can't be sold or refinanced, that doesn't mean those properties are completely off the market.
To purchase a property with a lien on it, the lien would need to be settled before going through with the sale. That could mean:
- The property owner settling or negotiating with the lien holder.
- The buyer paying off the overdue debts.
- Purchasing the home via short sale (if it's a mortgage lien).
- Working with a title company to have erroneous or closed liens cleared from the title.
Buying a property with a lien on it probably won't be a quick process. It can be slow working with creditors, the county, and other parties involved, so if you're looking for a quick flip or a project you can turn around fast, a liened property isn't your best bet.
Should you buy a property with a lien on it?
Many investors will steer clear of liened properties entirely, due to their added risk and costs. If you're eyeing a property with a lien on it, going through with the purchase could mean:
- A longer sales process: It can take months for a lien release to go through, even after the lien has been settled.
- More costs: You may need to pay a title agent for help, or you might need to settle the lien entirely.
- Problems financing: If you're financing your purchase with a mortgage loan, your lender will require a clear title before you can proceed.
If you do consider moving forward with the property, make sure you factor your additional costs into both your ROI calculations and offer to the seller. You need to protect your bottom line, and eating the costs of someone else's lien only makes sense if you know you can make it back on the property -- and then some.
The Millionacres bottom line
If you're looking at foreclosed homes or distressed properties, there's a good chance you'll encounter liens on occasion. Make sure you have a good process for locating these liens, and consider adding an experienced real estate agent, title company, and real estate attorney to your team just in case. They can offer guidance should a problematic property arise.