Liens and Encumbrances

Ideally, when you purchase a piece of property it will be free and clear of other people’s claims. Any non-owner’s right to the property can affect your ability to sell or use it as intended.

These claims are called “encumbrances,” a broad term that refers to any claim against a property. Encumbrances may be monetary (mortgage or lien) or non-monetary (easements and other property use restrictions).

The real estate and tax attorneys at Moskowitz, LLP have resolved a wide variety of cases involving liens and encumbrances. We draw upon our extensive experience in both real estate and tax law to resolve these difficult, complex cases for the ultimate benefit of our clients.

Most of the cases handled by our firm have involved liens, claims against property to secure payment of an owner’s debt. There are many kinds of liens, including:

Voluntary liens

Voluntary liens are created through contracts between creditors and debtors (e.g., mortgages).

Involuntary liens

Many types of liens are intended to secure payment for a property owner’s debts. Involuntary liens may follow court judgments and may be used to satisfy unpaid child support. Construction (aka mechanics) liens are typically imposed as a result of unpaid property renovations.

The Moskowitz, LLP tax attorneys have also had countless tax liens discharged, withdrawn, or subordinated for our firm’s clients. Tax liens may be imposed by the local, state or federal government – they seriously affect your credit report and hamper efforts to sell your property.

Superior and junior liens

Liens that are imposed for unpaid property taxes, special assessments, and federal estate taxes have a priority right over other liens in encumbered property. These are called “superior” or “perfected” liens. Construction, judgment, and federal and state income tax liens as well as mortgages are subordinate to superior liens – they are referred to as “junior” or “unperfected” liens. A junior lien is paid after the debt secured by a superior lien has been satisfied.

General and specific liens

A lien may be general, meaning over all of the debtor’s property, or specific, over only one property. Both general and specific liens can be identified through a title search.

California real estate and tax advice

Since buyers expect transfer of clear title, any and all debts secured by the property should be taken care of before the sale is completed. A seller is obligated to disclose the existence of any claims on their property prior to sale, since a buyer could be held liable for those claims even if the buyer was unaware of them at the time of purchase. If a seller fails to disclose the existence of a lien or encumbrance, the buyer may make a claim for breach of contract. If a lien or encumbrance is substantial, the contract may be terminated. The experienced San Francisco real estate and tax attorneys at Moskowitz, LLP can help you understand your rights and duties. Call us at (888) 829-3325 or (415) 394-7200.

Also see: Enforced Tax Collections

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