How Liens Affect Real Property

Liens affect property by creating a “cloud to title” which means that the lien essentially stains the title to where future buyers or title companies will hesitate to close on a sale.  Recorded money judgments (a/k/a Abstracts of Judgment) are not technically liens, but are commonly referred to as Judgment Liens because they cloud title. Most title companies will refuse to issue a title insurance policy unless liens are released (including recorded judgments). title-cloud-country

In Texas, the homestead may not be subjected to forced sale for the payment of debts except for certain types of liens. Most people claim their homes as homesteads. A person isn’t allowed to have 2 homesteads at the same time.

Some Of The Liens That Can Lead to Foreclosure:

1. Liens for Purchase Money of the Property;
2. Liens for Improvements;
3. Home Equity Liens;
4. Liens for Taxes;
5. Reverse Mortgages;
6. Liens in Place Before Establishment of the Homestead

Even for those liens that will not be able to force a foreclosure, they still stay on record. The title companies (and buyers) always prefer all prior liens to be cleaned up before closing on a sale transaction. Sometimes, the liens will be paid from the proceeds of the sale of the property. So, although the homestead may protect against foreclosure from certain lienholders, it does not make those liens disappear or make them noncollectable.

NOTE: For judgment liens, Texas provides a statutory method for getting a release of a judgment lien against homestead property—but only for judgments abstracted after 2007. If a judgment creditor (or other creditor or lienholder) wrongfully refuses to release a lien against a homestead, the homeowner can sue for Slander of Title and may be able to recover damages resulting from inability to sell the property.

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