There are a number of types of judgments and liens that can attach to your client and/or their property that affect title when they sell or refinance. Many of these will remain on title for anywhere from 7-20 years or more and must be satisfied accordingly. They may be required by their lender to pay off the lien or judgment in order to close their refinance, or if they’re selling their property, a portion of the proceeds may be used in order to satisfy the lien so they can pass on a clean title to the buyer.
Below are some of the most common types you may encounter on a preliminary title report that will notify you up front if there are any that will need to be addressed throughout the transaction process.
Federal Tax Liens State Tax Liens EDD Liens County Tax Liens
- All above-mentioned liens have a duration of 10 years from the date recorded unless they are released.
- The lien can be continued for successive periods and its original priority is maintained by recording and re-filing notice before the original lien expires.
- Like judgments, these liens are blanket liens and attach themselves to ALL property belonging to the delinquent taxpayer.
- Escrow will order the demand and the title company will manage the payment in order for the lien holder to record the release.
- Escrow must have an IRS Power of Attorney form to obtain a demand.
- Title will not close without a demand on federal and state tax liens.
LIENS THAT ATTACH TO A SPECIFIC PROPERTY
Mechanic’s Liens Notice of Action (Lis Pendens, Homeowner Association Liens, & Substandard/ Abatement Liens)
Mechanic’s liens are created when a contractor/subcontractor who has done work on a specific property was not paid when the work was completed. The duration of a mechanic’s lien is 90 days from the date recorded.
The contractor can foreclose on the property on which they recorded the mechanic’s lien but must commence the action within 90 days.
A lis pendens is a notice that a court action affecting the property has been filed. This document is also used to foreclose on a property under a mechanic’s lien. This item has an unlimited duration and must be released or withdrawn. · ·
Homeowner’s liens are recorded when a person is delinquent on their association dues. There is no fixed duration associated with this lien. Escrow must get demand.
Substandard liens are recorded by the city or county. They can be for weed abatement, hazardous substances, or substandard dwellings. This lien does not have a fixed duration. Escrow must order demand in order to find out if money is owed.
Money Judgments Spousal and/or Child Support Judgments
- A money judgment has a duration of 10 years from the date the judgment is filed.
- A spousal/child support judgment duration will extend over 10 years. Spousal support judgments will be considered until released; child support liens will be considered up to 5 years after the child reaches the age of majority.
- A money judgment can be extended for an additional10 years when a renewal of judgment is recorded within 10 years of the original date of entry of the judgment.
- The only judgment that has a duration of 20 years is one in favor of the United States of America, a Federal Corporation.
- Escrow orders the demand and full or partial satisfaction from the judgment creditor. The title company pays demands at the close of escrow.