(Kerrie) There seems to be a lot of confusion about liens and how they affect title to real property. Should we attempt to clarify the issue for our readers?

(Jim) Why of course, that’s the point of this epistle.

(Kerrie) Oh, so it’s now Jim’s “Letter to the Confusions,” is it? Just what is a lien, anyway?

(Jim) Well, the law describes it as a charge on the land. I prefer to think of it as making land responsible for some monetary obligation. It comes to us from Mother England.

(Kerrie) Not the history lesson again. So a mortgage is a lien on the land and it makes the land responsible for the borrower’s obligation to pay the promissory note.

(Jim) Right, a mortgage is a consensual lien, that is, the owner of the land consented to the lien by signing and delivering the mortgage. Most of the liens that we deal with are non-consensual. The most common example is a federal tax lien which the IRS can file with the Recorder if we fail to pay our federal taxes.

(Kerrie) Another type of lien is a judgment lien. If a person wins a lawsuit and the court awards that person a money judgment, the person can certify that judgment with the Clerk of Courts and it becomes a lien on the property of the person who lost the lawsuit.

(Jim) We also find mechanic’s liens in the chain of title to property. These are statutory liens given to persons who furnish labor or materials to an improvement to real property. If the person isn’t paid, then the person has the right to file a lien for the amount that is due. The biggest concern with mechanic’s liens is that the right to a lien arises when the work is done or the materials are furnished and the person has 60 days to file the lien with the Recorder. A seller could have had some work done to prepare the house for sale and has not paid the contractor. The contractor could then file a lien after the property is conveyed to the new buyer, if the contractor is within his filing period.

(Kerrie) Yes, but Ohio law protects the buyer in that case if the buyer has paid the seller in full for the property. This is not necessarily so in Kentucky or Indiana.

(Jim) This seems fairly simple. Why is there so much confusion?

(Kerrie) The confusion results from a number of things. The first is to identify the land that is subject to the lien. For a mortgage, it’s easy – the mortgage must give the legal description of the land subject to the lien. The same is true for mechanic’s liens. Judgment liens and tax liens are not filed against any specific land; they are filed against a specific person and encumber any land owned by that person at the time the lien is filed.

(Jim) So the problem is identifying the person subject to the lien. A certified judgment or tax lien may be filed against “John Smith” and the lien would encumber all the land that John Smith owned. The title examiner cannot always tell if the John Smith who has a lien is the John Smith that owns the property being examined.

(Kerrie) We used to be able to match social security numbers that were often listed on the liens. Now with the new privacy laws, that information is no longer available and we must do more research to identify the judgment debtor or the delinquent taxpayer.

(Jim) Another problem with liens is that some can attach to after-acquired property in addition to the property owned at the time the lien is filed. Federal tax liens, Ohio Child Support liens and Kentucky judgments all attach to after-acquired property. So if someone has a federal tax lien and buys a house, the lien attaches.

(Kerrie) All of this makes the title examiner’s job more difficult. When you think about it, when someone buys a house, they are potentially buying the bad money management, dishonesty, family squabbles and other legal problems created by the previous owners. I think the best protection is to always get an Owner’s Policy of Title Insurance when buying any property, whether it is new construction, land or an existing home. But that’s just my opinion.

(Jim) And mine.

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Jim and Kerrie Matre are married partners in the law firm of Matre & Matre Co., LPA. The firm generally limits its representation and practice to all legal issues related to real estate, construction law and corporate representation.

This article is written to introduce the reader to common real estate legal concepts. It is not intended to be legal advice to any specific party. As always, consult your attorney regarding your specific situation.

Have questions? Email them at either kmatre@matrelaw.com or jmatre@matrelaw.com