How to Identify Properties with Liens: A Guide for Real Estate Investors

If you’re in the market for a new investment, it’s essential to understand how liens can impact your next purchase. Property liens may be a hidden opportunity to secure a property at a great price — or leave you on the hook for bad debt.

What Is a Property Lien?

A property lien is a legal claim against a property granted by a court to a creditor. It entitles the creditor to seize the property if the debt remains unpaid. A prospective real estate investor may encounter four basic types of liens:

• Mortgage Lien: A lender may seek a this if the homeowner is behind on loan payments.
• Tax Liens: A state or local government may issue a tax lien against a property owner with unpaid property taxes.
• Mechanic’s Lien: Building contractors or suppliers may obtain these for unpaid services.
• Judgment Liens: Creditors or others may seek a judgment against the property owner, which may impact their home if it remains unpaid.

Why It’s Important to Find Liens on a Property

There are two reasons why real estate investors want to know about these liens. 

First, a debt-ridden property owner may want fast cash to repay the lienholder. In some cases, the owner may be willing to accept a deep discount on the property in exchange for the money, which can be a great investment opportunity for the right buyer.

Another reason to research liens is to get the complete picture of the property. If you’re unaware of the lien, the lienholder may unexpectedly seize the property after its purchase or demand you pay the bill. That means lost profits.

If you plan on partially financing an investment property, the lender will perform a title check before agreeing to the loan. If a lien exists, the lender won’t release the loan until the lien is removed. 

Methods for Finding Liens 

There are several ways an investor can find out whether a lien exists on a property.

1. Conduct a Title Search

The first option is to conduct a title search. A title search involves a complete review of public records to determine the property’s rightful owner and whether there are any liens. If you plan on using a lender to purchase property, the lender will conduct a title search during the closing process.

2. Check the County Clerk or Recorder’s Office

You can drop by your local county clerk or recorder’s office to track down liens. You’ll need a legal description of the property to find the records. 

3. Review Property Tax Records

The city or county Tax Assessor’s office maintains property tax records. You can visit the office and request records for the property. You may also find them online through your local government website.

4. Utilize Online Lien Search Tools

Several websites offer property lien search tools. NeighborWho allows you to search by the property owner’s name or address to uncover liens. Another option is InfoTracer, which can locate property, judgment, tax, and mechanic liens. 

Secure Financing With Dominion Financial Services

Dominion Financial Services provides tailored financing solutions and expert real estate investing advice. Our short-term bridge and long-term rental financing is available in all 50 states plus Washington, D.C. Contact our team today to learn more about our lending opportunities.