Why do we need to know about liens? To put it simply, If you buy a home with a lien on it, it could mean you will owe money to a company for services you never requested. Even worse, it could mean you have to foreclose on your home right after moving in.
How does this happen? The most common type of lien is a mechanic's lien. A mechanic's lien would be filed against a home for work done on the home, but the previous homeowner did not pay for. A mechanic has 120 days after completing the work to legally file the lien. Sometimes mechanics file the lien right away, others will wait for various reasons including trying to work it out with the homeowner that requested the work.
Because the lien can be filed 120 days after the completion of the work, its common not to show up on a title search when your title company does its search for liens.
This is a common issue with home builders who are not paying their contractors. In the case with a new home, the contractor has to wait until the home is completed to file their lien. Typically, once a new home is complete the homeowner takes possession immediately. And consequently, they take possession of the liens and financial responsibilities accordingly. It is important to know how the home builder is doing financially before purchasing a home.
How can you protect yourself against these liens? Talk with your title company for options regarding a higher level of coverage on your title insurance policy. Normally the cost is an additional $30 - $50 dollars and will save you a lot of headache if anything does happen.
Flinsk Real Estate is a company dedicated to educating home buyers and helping home buyers get the most out of their home buying experience. http://flinskrealestate.com
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