Negative Effects Of A Lien

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A lien is a notice attached to your property which puts everyone on constructive notice that a creditor has a claim. A lien is typically a filed and recorded in the county public records (if involving real property) or with the secretary of state (if involving personal property). Why does a lien help a creditor? Well... in order to sell or refinance the property, the borrower's lender is going to require clear title on the property as a prerequisite to the loan. Thus, a lien existing on your house has the negative effect of clouding the title and thus prevents you from selling your property. In order to clear title on the property, you must pay off the lien and have a release filed in the county public records putting everyone on notice of the discharge of indebtedness. If the lien is not paid off, certain lien holders can choose to foreclose on the property and recover what they owe. …show more content…

IRS Lien: An IRS lien is filed by the federal government for the failure to pay your taxes. If you happen to have equity in your property, the tax lien can be paid out of the sales proceeds at the time of closing. If the home is being sold for less than the lien amount, the taxpayer can request the IRS discharge the lien to allow for the completion of the sale. The taxpayer can also can ask that a federal tax lien be made secondary to the lending institution's lien to allow for the refinancing or restructuring of a

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