A lien is a legal claim on a property by a creditor, securing repayment of a debt or obligation. It must be resolved to clear the title, affecting the property’s sale or transfer until the debt is satisfied.
A title and escrow company can assist a property owner in removing various types of liens during a real estate transaction by following specific procedures tailored to each lien type. At Land Title Company here is how our title and escrow departments handle:
- Mortgage Liens:
- Identify the Payoff Amount: Our escrow department contacts the mortgage lender to obtain the exact payoff amount.
- Payoff Coordination: At closing, our escrow department uses the sale proceeds to pay off the mortgage.
- Release of Lien: The lender provides a release of lien document, which our title department ensures is recorded with the county recorder’s office.
- Mechanic’s Liens:
- Verify Validity: Our title department reviews the lien to ensure it was properly filed and is valid.
- Payment: Our escrow department obtains the amount owed the contractor or subcontractor and the agreed-upon amount is paid at closing.
- Obtain Release: Our escrow department ensures the contractor provides a lien release, which is then recorded by our title department.
- Judgment Liens:
- Identify the Creditor: Our escrow department contacts the creditor to obtain the payoff amount.
- Settlement and Payment: The amount owed is paid off from the sale proceeds at closing.
- File Satisfaction: The creditor provides a satisfaction of judgment, which our title department records to release the lien.
- Property Tax Liens:
- Determine Amount Owed: Our title department checks with the local tax authority to confirm the amount of unpaid property taxes.
- Payment at Closing: Unpaid property taxes are paid off from the sale proceeds.
- Release Documentation: Our title department ensures the tax authority updates the records to show the taxes are paid and the lien is released.
- Homeowners’ Association (HOA) Liens:
- Contact HOA: Our escrow department contacts the homeowners’ association to determine the outstanding dues.
- Settle at Closing: The outstanding dues and assessments are paid from the sale proceeds at closing.
- Obtain Release: The HOA provides a release of the lien, which is recorded by our title department.
- Federal Tax Liens:
- Contact IRS: Our escrow department contacts the IRS to get the exact amount due.
- Negotiation and Payment: The IRS lien is settled from the sale proceeds at closing.
- Certificate of Release: The IRS provides a certificate of release, which the title department records.
- Child Support Liens:
- Contact Child Support Agency: Our escrow department contacts the appropriate agency to verify the amount owed.
- Settle at Closing: The lien amount is paid from the sale proceeds at closing.
- Release Documentation: Our escrow department ensures the agency provides a release, which is recorded.
- Utility Liens:
- Verify Amounts Owed: Our escrow department contacts the utility providers to determine the unpaid amounts.
- Settle at Closing: The unpaid utility bills are settled from the sale proceeds.
- Obtain Release: The utility provider provides a release of lien, which is recorded.
During a real estate transaction Land Title Company plays a critical role in:
- Communication: Acting as a liaison between the property owner and lienholders.
- Funds Disbursement: Ensuring that the sale proceeds are properly allocated to pay off liens.
- Recording Documents: Ensuring that all releases of liens are properly documented and recorded to clear the title.
- Title Insurance: Issuing title insurance policies to protect the buyer and lender from any future claims related to undiscovered liens or title defects.
By managing these steps, we ensure a smooth transaction and a clear title for the new property owner. We’d like to work with you on your next transaction – call us at any one of our offices:
