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What Is A Property Lien?
When you finance a house, you sign a promissory note which is a contract promising to repay the loan borrowed. When you do this you voluntarily give the creditor the right to your property if you default on the loan. A creditor may attempt to place a lien on real property if the borrower is unable to keep up with their monthly payments. If the creditor places a lien on the property, then gain security interest on the property and may take action to repossess or foreclose on the property.
How Do I Remove a Lien From My Property?
Understandably, trying to figure out how to remove a lien can be nerve-racking. On the other hand, many home owners don’t actually know that they have other options than to simply forfeit their property. If you are facing a situation involving a lien on your real property, you may have several options to remove the lien, including:
- Discharge . A lien may be discharged through payment, expiration of the lien terms, or in connection with debt forgiveness procedures. These can be somewhat difficult to obtain, and may sometimes need to be enforced by a court if the other party won’t cooperate
- Lien Avoidance. Lien avoidance allows the debtor to be free from their lien and debt obligations. These are usually available in conjunction with Chapter 7 Bankruptcy filings. They may only apply to certain liens (usually judicial liens) and may sometimes be enforceable for a limited amount of time, such as during bankruptcy proceedings
- Pursuant to a Court-order. Sometimes a court may order the lien to be removed if the original demands were made through fraud, bad faith, or coercion
- Private Negotiations. A debtor may be willing to remove the lien after private negotiations. For example, they may lift the lien in exchange for a promise that the debtor will resume or increase their debt monthly payments
- Bankruptcy: You should use this option as a last resort. By filing a bankruptcy, you may remove the lien on the property in bankruptcy court.
Thus, if a lien is being placed on your property, don’t panic- the main idea is that you don’t have to automatically surrender title to a debtor without researching your options first.
How Do I Remove a Lien From Property After Debt Is Fullfiled?
After the debt is fully satisfied it is important to remove any existing liens on the property. To remove a lien after a debt is paid you must do the following:
- Get a
Lien Release form from your county clerk's office
- Fill the form completely and provide all information about lienholder, borrower, property description and address
- Show proof of the amount of debt that was paid on the form
- Get the lienholder to sign the form before a notary public
- File the form with the county clerks office and pay any required filing fee
What is a Lien “Waiver and Release”?
A lien waiver and release is a way to avoid having a lien placed on your property in the first place. It is basically a written agreement or promise from the lender that they won’t place a lien on your property in the event that you can’t keep up with payments. The lender basically “waives” their right to place a lien on the property.
While technically not a way to remove a lien from your property (since it prevents the lien beforehand), a waiver and release can be very favorable for the borrowing party. It may be included in the credit/mortgage documents, or can sometimes be a separate agreement from the loan contract. If a lender doesn’t bring this up initially, you should inquire as to whether protection is available in the form of a waiver and release.
Violations of a lien waiver and release are treated like any other contractual agreement. The lender may be held in breach of contract if they attempt to place lien on your property while a waiver and release agreement is in effect.
Why Is Removing a Lien On My Property Important?
Its important to remove a lien on property by releasing the lien because it shows proof that the title is clear and the owner is free and clear to transfer or sell the property to another. When purchasers of home do a title search of the property and see there are liens on the property, then they can back out of a home sale since the property is unmarketable. Also banks and lenders will not provide a mortgage until all liens on the property have been removed.
Do I Need a Lawyer for Assistance With Removing a Property Lien?
As you can see, there may be several options for removing a lien from property. If you need more assistance with how to remove a lien, you may wish to be matched with an experienced real estate lawyer in your area. Your attorney will be able to explain the various options available to you under the laws in your state. Most property liens are not enforceable immediately, in order to give the debtor some time to consider their options.