Unpaid liens can slow or even halt the process of buying or selling a home. They can even prevent you from getting a second mortgage or a home equity loan.
A lien is a legal tool used by a creditor when they want to make sure they’re paid what you owe them. Creditors use liens against you to let you know they mean business, and they usually place it on your biggest asset: Your home. Liens can result from unpaid bills with general contractors, taxes, or court judgements. They are public documents that are usually filed with the county where the property is located.
A clear title is needed in order for the sale of a home to proceed, and if there are liens attached to a property, the title is unclear. Most sellers will use a portion of the proceeds from their sale to repay the debt.
As a buyer, unknown liens can cause problems with your title later on. Title insurance protects you from damage if someone makes a claim on your title based on a past lien.