ABA Family Legal Guide

Home Ownership

Property Rights and Restrictions

Handling Property Constraints

What is a lien?

A lien, which dates back to English common law, is a claim to property for the satisfaction of a debt. If you refuse to pay the debt, whoever files the lien may ask a court to raise the money by foreclosing on your property and selling it, leaving you with the difference between the selling price and the amount of the lien. (Your mortgage lender, though, is ordinarily first in line for payment.) It's possible to lose a $200,000 house over a $5,000 lien, although someone with a $200,000 house would probably be able to figure out some other way to satisfy the lien.

There are several types of liens, any of which creates a cloud on your title. For example, a mechanic's lien or construction lien can occur if contractors or subcontractors who worked on your house (or suppliers who have delivered materials) have not been paid. They may file a lien at the local recording office against your property. If the lien is not removed, it can lead to foreclosure or inhibit your ability to sell your home. Liens often are filed in connection with divorce decrees. If two homeowners divorce, the court often will grant one of them the right to remain in the house. When that owner sells it, however, the former spouse may be entitled to half the equity. The divorce decree would probably grant that spouse a lien on the property for that amount. If everything goes as it should, the former spouses will get the full payment of their respective shares at the closing. Sometimes a lien created by a divorce decree is not registered, so if a purchaser is buying a house that may be subject to a divorce decree, a lawyer should examine all relevant documents to ascertain whether a lien exists. Title insurers should also be on notice to check the divorce decree.

Likewise, if you bought a home with your spouse but later divorced, your own divorce decree might give your former spouse a lien on the home for half the proceeds. That lien can hinder your ability to sell the home if your former spouse refuses to release the lien. A divorce lawyer may try to build a release mechanism--such as an escrow containing the deed and release--into the divorce decree.