By: Merideth Nagel, Esq.
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What are Liens?
Today we’re going to talk about liens, one of the most misunderstood parts of the title process. We get questions about this subject a lot more than you might think. So we’re going to jump right into it and hope that this information is helpful in clearing up any unknowns or misunderstandings for our realtors out there!
The most common lien that you’re likely to see is the mortgage. Most people are aware, in a general sense, of what a mortgage is. However, when people say “I’m paying my mortgage”, that terminology isn’t really correct. What you pay is the note and the mortgage is actually a document you sign at closing that gives the lender permission to put a lien on the property. That lien is what then gives a lender the right to take said property if a payment is not made toward the note. These liens are generally satisfied once the note has been paid in full.
Someone can also have a lien on their property because they were sued by a credit card company. Say you owe Visa $5,000 and you don’t pay that much attention to the lawsuit because you don’t have the money to pay them. If they successfully get a judgement against you, it will go against ALL the property that you own in every county where the judgement is recorded.
Many of you that have been doing real estate for a while will remember the days back before we began doing what we call a ‘lien search’, which is provided for now in standard contracts. The reason we perform those lien searches is because cities, counties, and other regulatory groups can have a lien against your property and not have that lien recorded. For that reason, it could pass on to the new buyer and they could be potentially foreclosed upon through no fault of their own. As part of the closing process, we now do those lien searches to ensure there are no unrecorded liens.
If you have unpaid child support, unpaid taxes, or you had a criminal conviction and you didn’t pay all of your court costs or your restitution, all of this can also result in a lien.
The good news it, however, that we can get almost all of these liens done away with in regards to your homestead property. In other words, you can sell your homestead without having to pay those liens off by doing a statutory procedure. This is a procedure, authorized by Florida statutes, in which a lawyer files a piece of paper with the court house that says, “I’m about to sell my homestead and since it’s my homestead, the Florida constitution says you can’t make me pay you off”. The holder of the lien then has forty-five days to contest. Ms. Nagel says she has filed many of these throughout her career and never once has she had it contested because the law is so clear about homesteads and the rights of home owners in regards to them. With a few exceptions (such as the mortgage), those liens do not have to be paid off.
Another way we can avoid a lien is if a husband and wife own a property AS husband and wife, called ‘tenants by the entireties’. Any judgement against one of them individually does not attach to property that they own jointly. Suppose that John Smith has a card with visa and they get a judgement against Jhim for $5,000, but John Smith and his wife, Jane Smith, own a piece of property together and it says on their deed that they are husband and wife. Guess what? That judgement does not attach to the property that they own together. That’s because we have what we call a ‘legal fiction’ here in Florida that when two people are married, they actually become one. It comes from the old Genesis story in the Bible. so, because you’re considered one by law, the property belongs 100% to the wife at the same time that it belongs 100% to the husband. A judgement against either one of them individually could, therefore, never attach to a property they own together as husband and wife.
We will do another video at a later time about the importance of taking title as husband and wife but if you have any questions about this ‘tenancy by the entirety’ or anything else that we have discussed, please feel free to give us a call! We are always happy to help even if you aren’t closing with us.
You can reach Merideth Nagel and our team at 352-241-8629.