Lien

A lien is a legal claim recorded against a property that secures a debt, which generally must be paid off before the property can transfer with clean title.

A lien is a legal claim recorded against a property that secures a debt. Some liens are voluntary — a mortgage or deed of trust the owner signed to get a loan. Others attach without the owner's signature: property tax liens, IRS liens, mechanic's liens from unpaid contractors, judgment liens from lawsuits, and HOA liens from unpaid dues. Nearly all of them have to be paid off before a buyer can take clean title, which is why every serious closing starts with a title search.

Here is how liens shape a wholesale deal. Say you contract a house at $90,000 and the title search comes back with $8,000 in back property taxes and a $4,500 mechanic's lien. Those payoffs come out of the seller's proceeds on the settlement statement — the seller nets $77,500 before their other closing costs, not $90,000. If the liens are bigger than the seller's equity, the deal either gets renegotiated, becomes a short sale, or dies.

What beginners get wrong is trusting the seller's memory. Owners routinely forget an old second mortgage, never knew about a judgment, or assume a paid-off debt was released when the release was never recorded. Liens follow the property, not the person — so open title early, get written payoff amounts before you market the deal, and let the title company clear everything at closing. Lien priority and enforcement are state-specific legal questions; this is not legal advice.