You already know that the most typical encumbrance against a property is a mortgage, a sum of borrowed money secured by the property. However, a lien is also an encumbrance — a claim or a judgment against a property.
A couple of examples of liens are: 1) a lien that has a rightful claim to ownership of a portion of a property, or 2) if a court action has resulted in a judgment that includes or is secured by an interest in a property.
Why is this important to know? There is an astonishing array of possible liens that can be placed against real estate. As a prospective homebuyer, you’ll want to make certain that you don’t end up with an unintended lien on your property.
First and foremost, you take out a buyer’s policy of title insurance to be as certain as possible 1) that there are no hidden liens against the property you’re buying, and 2) that you will have insurance coverage should a hidden lien arise after you take possession of the property.
But even before that, you avail yourself of the services of a real estate professional, and if necessary, the title officer who prepared your title report. Understandably, since you probably don’t buy and sell houses every week of the year, you aren’t aware of all the questions you should ask, all the potential problems you should anticipate and all the ways of protecting your investment.
Real estate transactions have never been so complex. Title reports and liens are only a small part of the many assessments and evaluations that you will make when you purchase a home.
Buy smart by having the best support team you can when you buy or sell real estate.
— Paul Suding, a real estate agent with Cool Santa Barbara Homes and Village Properties, is president of the Santa Barbara Association of Realtors. He can be contacted at .(JavaScript must be enabled to view this email address) or 805.455.8055.
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