When buying or selling a home, Closing is the final step in the transaction where ownership officially changes hands. However, judgments and liens can complicate the process, delaying or even derailing your closing entirely. Understanding how these issues arise and what steps to take can help ensure a smooth transaction.
What Are Judgments and Liens?
A judgment is a court-ordered decision requiring one party to pay money to another. If a property owner has an unpaid judgment, it may result in a lien being placed on their property. A lien is a legal claim against a property, often used as collateral for unpaid debts, such as:
● Unpaid taxes (tax liens)
● Contractor debts (mechanic’s liens)
● Unpaid child support
● Judgments from lawsuits
Liens must be resolved before the property can be sold or refinanced, as they attach to the property—not the individual.
How Do Judgments and Liens Affect Real Estate Closings?
1. Delays in Title Clearance
Before closing, the title company conducts a title search to uncover any encumbrances, including liens or judgments. If a lien is discovered, it must be addressed and cleared before title insurance can be issued and the property transfer completed.
2. Increased Closing Costs
Resolving a lien often requires paying off the debt, which can add unexpected costs for the seller. For buyers, it could mean renegotiating the terms of the sale or delaying the purchase until the issue is resolved.
3. Risk of Deal Termination
In some cases, the buyer may choose to walk away from the deal if liens or judgments create significant obstacles, particularly if the seller is unable or unwilling to resolve them.
Why Working with a Real Estate Attorney Matters
Judgments and liens can be complex, requiring legal expertise to resolve efficiently. A Real Estate Attorney can:
● Review the title report for any red flags.
● Negotiate with creditors to clear liens.
● Ensure compliance with state and federal laws.
● Provide guidance on closing documents.
Contact UBFK Law!
Judgments and liens don’t have to derail your Real Estate closing. If you’re preparing to buy or sell a property, the experienced real estate attorneys at UBFK Law can support you every step of the way in your real estate transaction and help you handle liens and judgments.
Contact UBFK today to schedule a consultation and ensure your closing proceeds without unnecessary delays.