When a property is getting ready to go on the market. The listing agent will pull a preliminary title report with his or hers preferred escrow company. Once the prelim has been received, the title company and realtor can see any liens and judgments that is attached to the property. When the home is sold ,the buyers lender and escrow company must provide free and clear title to the new homeowner. The buyer will not be able to obtain financing for the property if there is a cloud on the title.
Here are the most common liens or judgments that can cloud title:
- Property tax liens
When a home owner fails to pay their property taxes this lien will become in first position over the mortgage lien.
- Federal and State taxes liens
When unpaid federal or state income taxes aren’t paid that can sometimes lien the property. The most important item is to obtain a pay-off sheet from the IRS noting that the liens were paid in full. The title company will require this for recording.
- Judgment Liens, Child Support, and Alimony Liens
This is the most common that I have seen on a sale. Multiple child support and alimony liens can attach to the property as well.
- Contactors Lien or Mechanics Lien
This lien occurs when the homeowner hired a licensed and bonded contractor to do the work and never paid them. The contractor can lien the property for the amount that was owed.
In some cases, the escrow company can do a ‘’escrow hold back”. Meaning that the proceeds from the sale of their home will pay off any existing liens and or judgments. Every property and client are different so it important to have an experienced agent and escrow officer that can help the home seller through this process. I personally have experienced all of them. Let me know how I can help you navigate the selling process.