You have found your dream home, and your offer was accepted. At the closing, you find out that there is a sizeable judgment lien on the property. The title is not clear, which means the sale cannot go through unless the lien is satisfied. How can that happen? Here is some basic information about judgment liens.
What Are Judgment Liens?
A judgment lien in Pennsylvania is a product of a court case that determines that an individual has not satisfied a debt such as credit card bills, home repairs or medical costs. If the debtor is a homeowner, the creditor can appeal to the court to get a judgment lien on the debtor’s real estate to recover the money owed.
Why Is A Lien A Problem?
If you want to buy a home and a title search shows a lien from a property judgment, it will need to be taken off the title for the sale to go through.
How Long Is A Lien Valid?
A judgment lien is valid for five years, but the creditor can take steps to revive the judgment. Without revival, the creditor will lose claim to the judgment lien after 10 years.
What Are My Options To Clear The Title?
There are ways to resolve this issue, including:
• The lien may already be resolved, just not recorded as such. The owner needs to clear the matter with a lien release.
• If the owner’s judgment lien is still active, they must pay the fine either before or at closing to satisfy the debt.
• If the owner can’t repay the debt, a potential buyer needs to decide if they want the property badly enough to pay the debt themselves.
• The lien may still be attached to the home, but may not be valid. An experienced real estate lawyer will be able to sleuth out the specifics. If it is no longer valid, the lawyer should be able to get the lien removed from the title.
Often, potential buyers will walk away from a purchase rather than exercise this final option, especially if there are multiple liens. Ideally, you should have a real estate lawyer look at the title before your escrow closes, so that any potential issues regarding the title get vetted before the closing day.