How Property Liens in Texas Work Versus Other Types of Liens
A property lien is a specific type of lien that is only placed against the property you own, unlike a general lien that can be placed against everything you own or against you personally. A property lien is attached to a piece of property by a creditor when money is owed to them by the homeowner. These liens are recorded in public records to put the world on notice and assure that when a property is sold, refinanced, or foreclosed, the proceeds will be used to pay back the lienholder.
How Do Property Liens in Texas Work?
In Texas, a lien is simply created when a property owner fails to pay their property taxes and the property taxes become delinquent. If these property taxes are still unpaid after a certain time frame, the home could end up in foreclosure.
However, according to Texas law, homeowners are allowed to pay off the delinquent amounts to save their home and clear the lien before a tax sale. When property tax is paid, the lien is automatically removed from the property.
Voluntary vs. Involuntary
To understand liens further, there is sometimes a misconception that all liens result from a failure or refusal to pay a creditor. When actually, that is just one way to receive a property lien. There are two types of liens, voluntary and involuntary liens. A voluntary lien is attached to a property and used with the consent of a homeowner. This occurs when someone is in need of a loan from a lender to either purchase or pay off a property, giving the lender the right to place a lien on the home. By placing this lien on a borrower’s home, the lender now has a legal right over the property. A common example of a voluntary lien is a mortgage.
On the other hand, involuntary liens are usually the result of a failure to fulfill financial obligations. They are attached to property without the consent of the owner, leaving the creditor the right to your property. Property tax liens are a common example of an involuntary lien.
Different Types of Liens in Texas
There are various reasons why a lien can get placed on your property, but here are some of the most common property liens to look out for:
Mortgage Lien – when you borrow money from the bank (a loan) and are purchasing or refinancing a home, this would be considered a voluntary lien. For this lien to go away, the mortgage must be paid off completely.
Property Tax Lien – if you fall behind on paying your property taxes, a lien is automatically placed on your property which can lead to foreclosure. Learn more about how you can stop property tax foreclosure.
Mechanic’s Lien – if contractors, subcontractors, material suppliers, specialty material fabricators, design professionals, or landscapers end up going unpaid, these professionals have the right to put a lien on your property.
Judgment Lien – when someone is a party to a lawsuit and loses, they become the debtor and receive a court judgment in the form of a money payment to the creditor. If the judgment goes unpaid, the creditor has a right to place a judgment lien on the debtor’s property. In Texas, this lien can remain attached for ten years.
If you are in the state of Texas and receive a lien due to falling behind on your property taxes, we understand it can be an overwhelming process, but know that there are options. At Johnson & Starr our goal is to provide all customers with the financial support they need to help save their homes. To learn more about how we can help you, call us today at 800-203-9157.