The Hidden Hurdle: Liens Found During Title Search

You’re cruising toward closing, inspections are done, financing is lined up… then the title report drops a surprise.
There’s a lien on the property.

Take a breath. This happens more often than people think. And while it can delay a sale, it does not automatically kill the deal.

Let’s break down what a lien is, why it shows up during the title abstract, and what buyers and sellers should expect next.

What Is a Lien, anyway?

Think of a lien as a legal IOU attached to a property.

It means someone else has a financial claim against the home, usually because a debt tied to the property was never paid. When a title company runs a title search or abstract, they’re digging through public records to make sure the seller can transfer clear ownership.

That’s often when a lien surfaces.

Common search moments:

• During the initial title commitment

• When updating title before closing

• After an old issue finally hits the public record

Someone just spent $236,000,000 on a painting. Here’s why it matters for your wallet.

The WSJ just reported the highest price ever paid for modern art at auction.

While equities, gold, bitcoin hover near highs, the art market is showing signs of early recovery after one of the longest downturns since the 1990s.

Here’s where it gets interesting→

Each investing environment is unique, but after the dot com crash, contemporary and post-war art grew ~24% a year for a decade, and after 2008, it grew ~11% annually for 12 years.*

Overall, the segment has outpaced the S&P by 15 percent with near-zero correlation from 1995 to 2025.

Now, Masterworks lets you invest in shares of artworks featuring legends like Banksy, Basquiat, and Picasso. Since 2019, investors have deployed $1.25 billion across 500+ artworks.

Masterworks has sold 25 works with net annualized returns like 14.6%, 17.6%, and 17.8%.

Shares can sell quickly, but my subscribers skip the waitlist:

Skip waitlist

_{*Per Masterworks data. Investing involves risk. Past performance not indicative of future returns. Important Reg A disclosures: masterworks.com/cd}

Common Liens That Show Up Before Closing

Not all liens are created equal. Some are easy fixes; others take more time.

Here are the usual suspects:

• Tax liens: Unpaid property taxes or IRS tax debt

• Contractor or mechanic’s liens: Work done but never paid for

• Judgment liens: Court judgments from lawsuits or unpaid debts

• HOA or condo liens: Past-due association dues or special assessments

• Utility or municipal liens: Unpaid water, sewer, or local fees

This is one of the most common title issues before selling a house, especially if the property has changed hands or owners over time.

Why Liens Matter at Closing

Short version: liens usually must be resolved before the sale can close.

Title companies and lenders want clean title. That means no unpaid claims hanging out after ownership transfers. If a lien remains, it becomes the buyer’s problem, and lenders are not signing up for that.

This is where delays can creep in.

A delayed real estate closing due to a lien is frustrating, but it’s also fixable in many cases.

What Sellers Can Do to Clear a Lien

If you’re selling and a lien pops up, you typically have a few paths forward.

Common solutions include:

• Paying it off from sale proceeds
  The lien amount is paid at closing, before the seller receives their net proceeds.

• Negotiating a payoff or release
  Some lienholders will accept less than the full amount or agree to a partial release.

• Disputing the lien
  If it’s invalid, outdated, or already paid, documentation can sometimes remove it.

• Providing proof of satisfaction
  Old liens sometimes stick around due to paperwork that was never recorded.

This is the practical answer to how to remove a lien from property in a transaction setting.

What Buyers Should Expect and How to Prepare

For buyers, a lien discovery usually means one thing first: patience.

Here’s what to know:

• Closings may be delayed while the lien is resolved

• Earnest money is typically protected if the contract has a title contingency

• You should not close until the lien issue is cleared or insured over

• Communication matters, ask for updates and timelines

If you’re wondering what happens if a lien is found before sale, this is it. The deal pauses while the problem is fixed.

Most buyers never pay these liens themselves, but you do need to understand the risk if they are not resolved properly.

Can the Deal Still Go Through?

In most cases, yes.

Liens are common, especially with estates, rentals, or long-held properties. The key is addressing them early, documenting the resolution, and making sure the title company signs off before closing.

This is exactly why the title process exists, to catch problems before keys change hands.

State Laws and Fine Print

Rules vary by state, county, and even by lien type.

Some liens expire. Others don’t. Some can be insured over. Others absolutely cannot.

This isn’t legal advice, but here’s what to know: your contract, local law, and title company control the outcome. When in doubt, bring in a qualified local pro.

Bottom Line

A real estate lien at closing can slow things down, but it rarely ends the deal.

Sellers usually resolve liens with sale proceeds or documentation. Buyers usually wait it out with protections built into the contract. The process exists to protect everyone involved.

Liens are speed bumps, not brick walls. Handle them correctly, and the transaction can still cross the finish line.

Have a title issue you want unpacked in a future edition? Hit reply.