What is a lien on a house | Property Liens [2022] - YouTube

So what is the lien on a house? Basically it's  a homeowner that owes somebody some money and  

we're going to cover that today. I'm gonna try  and make this as simple as possible. Hey it's me  

Gerald, an active real estate agent and investor  and I'm all about helping others with what I've  

learned and continue learning since 2007 so if  you're researching or need help selling or buying  

a house without feeling pressured, then you've  come to the right place. Make sure you subscribe  

and click that notification bell to get more  videos just like this when they come out. Okay  

so the homeowner knows about the mortgage so they  make a monthly payment, now somebody else they  

owe which more than likely that they know they owe  them but they didn't realize they could put a lien  

on my house. That's where this comes into play,  now believe me the person has probably already  

try to collect the debt and they'd rather have the  money and rather get paid then going about putting  

the lien on somebody's house. So these liens are  due because a homeowner doesn't pay their bills.  

So, how does this tie in to selling a house? Liens  are typically recorded at the county records so  

check it out because probably easier for me to to  show you. Okay so this is a quick illustration of  

a mortgage lien I know a lot of y'all probably  know how this works but bear with me i'ma show  

you how it all ties in with the other liens as  well. Again, there's a lot of moving parts but  

right now we're just gonna deal with a mortgage  lien. In this example we're going to use a hundred  

thousand dollar house that Henry bought about a  year ago and he put twenty thousand dollars he  

was working with Larry the lender that fronted him  eighty thousand dollars this is what we call an  

80/20 loan so when Henry closed on this house to  purchase it he he sent the twenty thousand dollars  

to Tom. Tom the title guy this is a title company  and Larry sent the $80,000 to the title company  

as well but Larry's got a lot of skin in the game  how does he know Henry's gonna pay him off well  

Larry created another document it's called a real  estate note also known as a mortgage lien alright  

and he's gonna have Henry sign this document what  that does is that that attaches this property here  

to that lien as collateral so in the event that  Henry can't pay, Larry has got to have some kind of recourse  

to come over here and take the house over so he can get his money back now once all that money gets over there  

Tom gives all that money to the seller, whoever they are buying that house from so once this  

lien is signed by Henry, Tom the title guy  will take this lien and record it over here at the  

county records Ok, the county records is public  records so it's there for anybody see that Henry  

still owes Larry $80,000 that lien can only be  released by Larry so Larry probably ain't  

gonna release it until his money is paid till  he gets all that money all right so we gonna  

keep this kind of simple let's say Henry pays  everything off over time what happens is Henry  

doesn't owe Larry more money Larry creates  another document it's called a release of  

lien or something similar that gets filed over  here as well at the county records so as far as  

Larry's concerned this document what that does is  lets everybody know that that mortgage lien has  

been satisfied Henry doesn't know Larry anymore  money as far as Larry's concerned there is no  

liens that's that's just Larry though okay so now  say Henry wants to sell it to Bob the buyer Bob  

the buyer works with his own with his own title  company or it could be the same title company it  

doesn't matter but the first thing Tom this title company, or one of the first things you can  

do he's gonna come up here and check the county  records among other places and when he checks  

with the county records he's gonna notice this  release of lien it's gonna look good around there  

and everything should be good there is no other  liens nothings preventing him, he finds out that  

Henry does own it free and clear you can run up a title insurance policy to back him up Bob  

the buyer is happy he's getting the house is  free and clear maybe he's paying cash for it but  

what happens when Henry wants to sell before Larry  is paid off let's let's run it that way real quick  

real quick if you are getting value out of this video make  sure you give us a thumbs up and more importantly  

if you know this information can help somebody  make sure you share this video with them alright  

thanks okay so we're gonna redo this a little  bit we still have the mortgage lien in place  

remember this lien attaches to this property  over here alright this was previously eighty  

thousand twenty thousand that's kind of old from  the previous transaction alright so Bob the buyer  

comes to buy the house from Henry Henry has not  paid Larry off all the way yet but he's still  

gonna buy say for a hundred and twenty thousand  dollars alright he's got a little bit equity  

built up and he's paid him off a little bit but  not all the way tom title guy is still gonna come  

over here and check the county records Henry  didn't let Tom know about everything that he's  

supposed to let him so he finds this lien that's one  thing and and that's kind of expected if somebody  

has a house their financing so what he's going to  do is gonna get with Larry the lender with with  

Henry's permission and he finds out he still  owes him $70,000 but he also finds out is he  

found a second mortgage for $30,000 Henry Henry  forgot to tell him but he took thirty thousand  

more dollars to update his house he also found a  ten thousand dollar mechanic's lien so Tom asked  

Henry what will happen well there's ten thousand  what's a mechanic's lien I don't know it's ten  

thousand dollars less that's the money that I was  supposed to pay for a roof but the roofer didn't  

do his job right Henry got a new roof new roof for  10k but he aint paying because he wasn't happy they  

had some kind of disagreement a lot of times when  you get work done to your house you'll have a big  

contract a lot of paperwork to make you sign all  that kind of stuff , Henry didn't realize that he  

was giving the roofer permission basically to put  a mechanic's lien on the house so now the roofer  

put $10,000 of mechanic's lien so now he's got  seventy thousand on the first mortgage he's got  

thirty thousand in a second mortgage Henry said  that I thought that would have gone down by now  

I've been making payments on it but he didnt realize it is interest-only  loan so the principle remains the same so you  

got seventy thirty and ten that's one hundred and ten  K can he still close for $120,000 he should be  

able to depending on how many how much it's gonna  be fees and closing costs and taxes commission but  

just say he's got a hundred chance so he's got  ten thousand dollars to work with say Tom work  

everything out and it's a ninety five hundred  dollars in taxes, commission, fees, all that kind  

of stuff so Henry walks with five hundred dollars  after closing and he's good but what happens  

if the market value of that house drops and he  didn't realize what was going on and now it's  

100 and he owes 110 okay so he owes more than  a house is worth and now Henry's in a position  

where a lot of people call it's upside down with  this house he owes more than what he can get for  

it can he still sell it well technically yes he  still can but Henry's got to come out of his pocket  

to get rid of that uh the debt and or work with  his creditors eliminate this debt maybe he can  

work something out on here to deal with them now  there are times that somebody has made a mistake  

say the new roofer Henry did pay him off maybe  he just forgot a roofer just forgot to go and  

put a release of lien on that not like I do then  all the roofers gotta do is release the lien and  

there's ten thousand dollars saved okay the mechanics lien Henry knew about in other words he knew that  

he owed the roofer some money but he didn't  realize the roofer could actually do that put  

that lien on the house that probably came from  a contractor that Henry signed a lot of times we would get  

somebody come work in the house and get all this  paperwork in this contract signed and we don't  

read it. The roofer was probably just enforcing  that contract that he signed so yes mechanic's  

liens are usually from contractors you know if  you had work done on your house but there are  

other types in the first example if Henry paid  off the house completely free and clear he'd still  

have to pay real estate taxes now if he fails to  pay those real estate taxes eventually somebody  

could probably put a lien on for real estate taxes called tax lien judgments is another way he could that  

could attach to a property if Henry got himself in  some kind of legal situation where he's arguing or  

they're trying to work something out legally  well the judge can actually order him to pay  

and put a judgment on him and that could actually  go to the to the property if he does not pay that  

person that he ordered to pay maybe we thought  it was in go away but when Tom went to the title  

work company to look at the title he found that  judgment another big one is IRS liens they don't  

play they come to get whatever these liens work  in the same way because they attach to your  

property and you can't get rid of them unless you  settle with your debtors now as we're wrapping up  

these liens are more involuntary you knew about  them probably didn't realize they could actually  

attach to your property and that makes the difference between these types of liens and your mortgage lien where you know you  

get into debt so if you plan on selling the buyers  will usually submit a contract and request at the  

seller pay title it's not mandatory reason  is some say the seller that the seller should  

be responsible to ensure that there is they are  passing good title to the to the buyer well if  

that's being the case then why not the seller go  ahead and start working with the title company  

you can shop around their prices and start looking  into your title work to get all that behind you so  

you'll know that you're coming in with a clear  title when you do get a contract I have a quick  

question for you what is your biggest concern when  it comes to selling the house let me know in the  

comments section below the community you might get  some other answers they may be able to help you overcome  

those concerns as always feel free to contact me and  the best way is to text me, my contact information  

is on this page or down in the description  below thanks for watching and have a blessed day