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I’ve worked with thousands of home buyers, and I can tell you that finding out about an unexpected property lien just days before closing is one of the most stressful things that can happen in real estate. In 2025, the number of foreclosures rose by 13.9% from the previous year. In April alone, there were 36,033 properties with foreclosure filings. Title professionals found problems, such as unresolved liens, in 25% of all real estate titles they looked at. These numbers tell us something very important: property liens are still a big problem that every buyer needs to look into.
Liens are especially bad because they are attached to the property, not the person. When you buy a property with a lien on it, you are responsible for paying off that debt, even if you didn't create it. If you don't find and fix a contractor's mechanic's lien from five years ago, unpaid property taxes from the previous owner, or a judgment lien from a lawsuit settlement before closing, they can stay with the property and become your responsibility.
There is a lot of money at stake. In 2022, title insurers paid out $595.6 million in claims. Mechanic's liens were a major factor in new construction deals, and tax liens were still one of the most common problems that needed to be fixed before closing. In 2023, real estate transactions also lost more than $145 million to wire fraud, and almost 1 in 20 closings involved some kind of attempted fraud. These numbers show why lien searches are a must in the real estate market of 2026.
This complete guide shows you the exact seven steps to finding property liens, explains what each type of lien means for your transaction, gives you proven ways to get rid of them, and gives you real-life examples from my experience helping buyers deal with these problems. Knowing how to find and fix liens protects your investment and keeps you from having to deal with expensive surprises, whether you're a first-time home buyer or an experienced investor.
A property lien is a legal claim on real estate that protects a debt. A lien is a financial hold on the property that means the creditor who has the lien can take ownership of the property or force the sale of the property if the debt is not paid. The most important difference between the two is that liens are attached to the property itself, not the person who took out the loan. This is the most important difference. This means that liens stay in place even after ownership has changed hands, unless they are properly removed.
Your mortgage is the most common property lien—your lender has a legal claim on your home until you pay off the loan in full. But liens can come from many sources: unpaid contractors who worked on the property, local governments seeking unpaid taxes, court judgments from lawsuits, or even homeowners associations seeking unpaid dues. Different types of liens have different levels of priority, different ways to get rid of them, and different effects on your purchase.
Mortgage liens represent voluntary liens—you agreed to them when borrowing money to purchase the property. The lender's claim stays in place until you pay off the entire mortgage balance or refinance to a new lender. These liens are recorded in public records and are typically the largest financial claim on residential real estate. On most properties, the mortgage lien has first-priority position, meaning if the property is sold or foreclosed, the mortgage lender gets paid before other creditors.
Tax liens occur when property owners fall behind on federal income taxes, state income taxes, or local property taxes. The IRS can file a federal tax lien that attaches to all your property—real estate, vehicles, bank accounts—until the tax debt is satisfied. Property tax liens from your county or municipality are even more serious because they often take super-priority status, meaning they get paid before even the mortgage in foreclosure situations. Given the 2025 foreclosure increases and serious delinquency rates rising in multiple states, tax lien risks have elevated.
Judgment liens result from civil lawsuits. If someone successfully sues a property owner and wins a monetary judgment, they can file that judgment as a lien against the owner's real estate. The judgment lien ensures the winner gets paid from the property's sale proceeds. These liens can sit dormant for years—I've seen judgment liens from 2010 lawsuits discovered during 2025 title searches—and they typically accrue interest during that time, increasing the total amount owed.
Mechanic's liens (also called construction liens or materialman's liens) protect contractors, subcontractors, and suppliers who worked on a property but weren't paid. If a previous owner hired a roofing contractor for $25,000 worth of work but only paid $15,000, that contractor can file a $10,000 mechanic's lien. According to the American Land Title Association, mechanic's liens are a top driver of claims in new construction transactions, often involving tens of thousands of dollars.
The legal principle is straightforward: liens run with the land. When you purchase property, you're taking ownership subject to all recorded liens unless they're specifically released or paid off as part of the transaction. This is why the phrase 'buyer beware' is so critical in real estate. If you skip the lien search or your title company misses a filing, you can find yourself responsible for someone else's debt.
Real example from my 2024 transactions: a buyer purchased a foreclosed property in Florida without conducting a thorough lien search. Three months after closing, a contractor appeared with a $32,000 mechanic's lien from renovations the previous owner commissioned but never paid for. The lien was properly recorded but wasn't caught during the title search. The new owner ended up negotiating a $22,000 settlement—money that could have been avoided with proper due diligence.
Every property transaction in the United States is recorded at the county level, making your county recorder's office or county clerk's office the primary source for lien information. Most counties now offer online access to property records through their official government websites, allowing you to search from home rather than visiting in person. Look for sections labeled 'Property Records,' 'Recorder's Office,' 'Land Records,' or 'Property Search.'
The search process typically requires the property's address or parcel number (a unique identifier assigned to each property for tax assessment purposes). Once you locate the property, you'll see recorded documents including deeds (ownership transfers), mortgages, releases, liens, and sometimes easements or restrictive covenants. Documents are usually listed chronologically, so scroll through to identify anything filed in recent years that might affect the title.
Your primary targets are any documents containing the words 'lien,' 'judgment,' 'tax,' 'IRS,' 'mechanic,' 'HOA,' or 'contractor.' Pay special attention to the filing dates and whether you see corresponding release documents. A mortgage filed in 2018 should have a 'satisfaction of mortgage' or 'release' filed when it was paid off. A mechanic's lien from 2020 should show a 'lien release' if it was resolved. If you see a lien without a release, that's a red flag requiring investigation.
Document amounts matter significantly. A $500 HOA lien is typically straightforward to resolve. A $150,000 judgment lien from a lawsuit represents a major obstacle that could kill your transaction. Note the exact lien amount, filing date, lien holder's name and contact information, and the document or instrument number—you'll need these details for follow-up research and resolution efforts.
Online searches work well for recent records (past 10-20 years) but older documents may only exist in physical form at the courthouse. If you're buying an older property or the seller has owned it for decades, consider visiting the recorder's office in person or working with a title abstractor who specializes in historical searches. While online searches are usually free, some counties charge $1-5 for official document copies, and in-person visits may involve nominal copy fees of $0.25-1.00 per page.
While county record searches help identify obvious liens, professional title searches go deeper. Title companies and abstractors have access to specialized title plants (private databases), cross-reference multiple jurisdictions, check for federal tax liens filed with the IRS, search court records for judgments, and verify the complete chain of title dating back decades or even to the original land grant. Given that title professionals discover defects in 25% of all real estate titles analyzed, the expertise pays for itself.
Title search costs typically run $150-300 when purchased separately, though most buyers get them as part of title insurance (0.5-1% of purchase price). The American Land Title Association reports that title search errors cause less than 10% of claims, demonstrating the high accuracy professional searches provide. These professionals caught $500 million worth of public record errors in 2023 alone—errors that would have become buyers' problems without intervention.
A comprehensive title search report provides the complete ownership history (chain of title), all recorded liens with current status, existing mortgages and whether they're current or in default, tax payment status including any delinquencies, easements or restrictions affecting the property, pending legal actions like foreclosures or bankruptcies, and verification that the seller has legal authority to transfer ownership.
The report highlights any 'clouds on title'—issues that must be resolved before closing. Common clouds include unreleased old mortgages (property was paid off but the release was never recorded), liens from previous owners, gaps in the ownership chain, name discrepancies in recorded documents, or unresolved estates (previous owner died but probate wasn't completed). Each cloud requires specific remediation before you can obtain clear title.
Here's what I tell every borrower: the title search identifies known issues, while title insurance protects against unknown issues that surface later. Given that wire fraud losses in real estate exceeded $145 million in 2023 and nearly 1 in 20 closings involved attempted fraud, title insurance provides essential protection. The one-time premium covers you for as long as you own the property, protecting against hidden liens, forged documents, undisclosed heirs, recording errors, and other defects the search didn't catch.
If you're buying a property you currently own or considering a property where the seller's liens might affect the transaction, credit reports provide valuable information. Tax liens, judgment liens, and sometimes mechanic's liens appear in the public records section of credit reports, though it's worth noting that tax liens haven't appeared on credit reports since April 2018 due to credit bureau policy changes. Still, judgment liens and other public record items that could affect your transaction often show up.
You can obtain free credit reports from all three bureaus (Equifax, Experian, TransUnion) through AnnualCreditReport.com. Look in the 'Public Records' or 'Collections' sections for any liens, judgments, or tax-related entries. Even if you're not the property owner, understanding how liens appear on credit reports helps you evaluate seller disclosures and verify they're being truthful about the property's lien status.
Experienced real estate agents have established relationships with title companies and often order preliminary title searches as part of their due diligence when helping you evaluate a property. A good agent runs this search before you make an offer, identifying deal-breaking liens early so you don't waste time and emotion on a property that can't close. In competitive markets, this advance knowledge gives you negotiating leverage—you can make an offer contingent on specific liens being released, or you can walk away before investing in inspections and appraisals.
Some states (New York, New Jersey, Massachusetts, Connecticut, Pennsylvania) require attorney representation at closing, making legal review of liens mandatory. Even in states where attorneys are optional, consider hiring one if you encounter complex lien situations: multiple overlapping liens, disputed lien amounts, liens from previous foreclosures, estate issues affecting title, or federal tax liens requiring IRS negotiation. Attorney fees typically run $500-1,500 but can save you tens of thousands in improperly resolved liens.
The most effective lien searches involve coordination among all three professionals. Your agent identifies the property and initiates preliminary research. The title company conducts the comprehensive search and provides the title commitment. The attorney (if involved) reviews legal implications, negotiates with lien holders, and ensures proper release documentation. This triangle of expertise catches issues that any single professional might miss.
The chain of title traces every ownership transfer from the current owner back through decades of previous owners, ideally to the original land grant or patent. Each 'link' in the chain represents a deed transferring ownership from one party to another. A complete chain with no gaps demonstrates clear, uncontested ownership. Breaks or uncertainties in the chain—missing deeds, incorrect names, unrecorded transfers—create title defects that must be corrected.
Liens often hide in chain of title complications. An heir who never properly probated their parent's estate may still have legal claims to the property. A divorce decree that divided property but wasn't properly recorded might mean an ex-spouse has rights. A foreclosure sale that didn't follow proper legal procedures could be challenged, making subsequent ownership transfers questionable. The title abstractor's job is finding these complications before they become your problem.
Most title searches go back 30-60 years, though requirements vary by state and title insurance company policy. Some states require 'full marketable title' searches back to the original grant. Properties with complicated histories—multiple foreclosures, estate settlements, quiet title actions—may require searches extending 80-100 years. Given that the average foreclosure timeline reached 762 days in 2024 (up 6% from 2023), properties currently in or recently emerging from foreclosure need especially careful chain review.
Federal tax liens are filed with state authorities but originate from the IRS. You can search the IRS's public records through your state's Secretary of State office or appropriate lien filing authority. Unlike property-specific liens, federal tax liens attach to all of a taxpayer's property, meaning if the seller owes the IRS $50,000, that lien affects every asset they own including the house you're buying. The IRS gets paid from sale proceeds before the seller receives anything.
Property tax liens are filed at the county level and are often available through county treasurer or tax assessor websites. Search by property address or parcel number to see current tax payment status, any delinquencies, and whether the county has filed a tax lien. In some jurisdictions, property tax liens are sold to investors at auctions—if a lien investor now holds the claim, you'll need to negotiate with them rather than the county to clear the debt.
Property tax liens almost always take super-priority status, meaning they get paid before the mortgage lender if the property forecloses. This is why mortgage lenders require borrowers to pay property taxes through escrow—it protects the lender's interest. As a buyer, you need to verify that all property taxes are current before closing because you'll inherit any delinquencies along with the property. In 2025's elevated foreclosure environment (Q1 filings up 11% from previous quarter), tax lien risks have increased in struggling markets.
Municipal liens arise from code violations, unpaid utilities (water, sewer, trash), special assessments for infrastructure improvements, and fines from building, health, or safety departments. These liens are particularly dangerous because they often go unrecorded in standard county records—the municipality maintains them in separate databases. A comprehensive title search should include municipal lien certificates from the city or town where the property is located.
Homeowners association liens for unpaid dues, special assessments, or fines can accumulate quickly. Monthly dues of $300 unpaid for two years create a $7,200 lien. Special assessments for major repairs (roof replacement, pool renovation) can add $10,000-30,000. HOA liens typically take priority over second mortgages and sometimes even first mortgages depending on state law. Request an HOA status letter showing current dues, any delinquencies, upcoming special assessments, and confirmation of no outstanding liens.
Less common but potentially problematic are liens from utility companies (past-due electricity, gas, water), waste management companies, and even lawn care or snow removal services in some jurisdictions. These liens rarely appear in standard searches but can create title issues. Municipal lien searches should capture utility liens, but request specific utility payment verification from the seller or their closing attorney to be certain.
The easiest way to get rid of a lien is to pay off the debt as soon as it is due. Use the information in the lien documentation to get in touch with the person who has the lien directly. You should ask for a payback amount, which could include interest that has been collected since the filing. You should also include payment instructions and a written promise that a release will be given once the payment is made. Before proceeding with the closure, ensure that the release is noted in the county officials' records. Do not rely on verbal promises or physical proof to ensure your safety. A better plan of action would be to ensure that the release is recorded. This ensures that the release actually occurs.
Escrow is a frequent method for paying off property liens at closing. The only purpose to employ escrow is to repay liens. Escrow is one method for achieving this. Escrow payments for liens are straightforward and speedy. According to the terms of the sale agreement, a portion of the proceeds will be used to settle the property's liens. The contents of the agreement that will follow remain unknown. This is needed by the agreement's terms. The original lienholders will get these payments shortly following the sale. This is going to further complicate everything. In this method, the liens will be paid off. The amounts will be determined at this stage by the title firm. This decision-making will fall on their shoulders. What this implies is that there will be no new regulations added to the process, and all liens on the property will be erased before the title is transferred to you. Prior to the transfer of title, this will take place. This is a necessary step prior to the transfer of ownership to the current market participant. Make sure you get a copy of all the release paperwork that comes with the package when you finish the deal. All of this is happening because the deal is about to close. Here, this is of the utmost importance. It would also be helpful for you to have copies of these documents. This is something else they suggest you do. Another thing to think about while doing this is this.
Not all recorded liens are valid. Liens filed after the statute of limitations expired, liens against the wrong property (wrong parcel number or address), liens for debts that were paid but the release wasn't recorded, or liens filed without proper legal procedures can be challenged and removed. Work with a real estate attorney to file disputes with the county recorder, request hearings if necessary, and potentially file quiet title actions to clear invalid liens from the record.
Lien holders often accept settlements for less than the face amount, particularly on older liens or when the alternative is getting nothing in a foreclosure. A $15,000 mechanic's lien from 2019 might settle for $10,000 if the contractor wants to avoid legal costs. Judgment liens from lawsuits sometimes settle for 50-70% of the original amount. These negotiations require documentation of the settlement terms and recorded releases confirming the lien is satisfied.
A couple in South Carolina bought a renovated flip house that looked perfect. Three months after closing, a roofing contractor filed a lawsuit claiming the flipper owed $18,000 for roof work. The lien was filed 15 days after their closing—within the contractor's legal window but after title insurance was issued. The title insurance covered their legal defense but not the debt itself because the work occurred pre-purchase. They eventually settled for $12,000. The lesson: on recently renovated properties, require the seller to provide lien waivers from all contractors before closing.
An investor purchased a foreclosed property in Illinois for $145,000, knowing the property had $8,000 in delinquent property taxes. What they didn't know: the county had also filed $3,200 in code violation liens for tall grass, unsecured structures, and zoning violations. These municipal liens didn't appear in the standard title search. The investor had to pay both amounts plus $2,100 in accumulated penalties and interest to clear title. The lesson: always request municipal lien certificates separately from standard title searches.
A buyer in Nevada offered $380,000 for a property, not knowing the seller owed the IRS $275,000 in back taxes with a filed federal lien. The IRS claimed first rights to the sale proceeds. After paying the $290,000 mortgage and the $275,000 tax lien, only $15,000 remained—not enough to cover the seller's broker commission, closing costs, and remaining obligations. The transaction collapsed. The lesson: search for federal tax liens early, especially when buying from sellers in financial distress or foreclosed properties.
Property liens represent one of the most significant risks in real estate transactions, with title professionals discovering defects in 25% of all titles and the industry spending $500 million annually correcting public record errors. In 2025's elevated foreclosure environment—with activity up 13.9% year-over-year—the likelihood of encountering properties with unresolved liens has increased substantially, making thorough searches more critical than ever.
The seven-step process provides comprehensive lien identification: start with county public records to identify recorded liens, order professional title searches for expert analysis and title insurance eligibility, check credit reports for personal lien history, work with agents and attorneys who have title company connections, review the complete chain of title for historical complications, search federal and state tax lien databases separately, and verify municipal and HOA liens that often escape standard searches.
It takes smart action to get rid of a lien, depending on what kind it is. Negotiate payoffs with lien holders (usually at closing through escrow), fight invalid liens in court, or agree to lower amounts when the situation calls for it. Always ask for recorded releases before closing, and make sure to include copies of all release paperwork in the closing package.
In reality, even conscientious buyers might encounter lien issues, although the majority of errors are discovered prior to closing when due diligence is performed properly. Always ask for contractor lien waivers on renovated properties, municipal lien certificates in addition to standard title searches, federal tax liens when sellers are in financial trouble, HOA status letters indicating current dues and no pending assessments, and never skimp on title insurance to save money—the $2,000-4,000 premium protects against catastrophic six-figure lien discoveries.
With wire fraud losses estimated to exceed $145 million by 2023 and nearly one out of every 20 closings including attempted fraud, thoroughly analyze all lien release documents and double-check wire instructions by calling known numbers rather than sending them over email. In 2026's complex real estate market, competent title searches, title insurance, and personal verification provide the confidence you need to complete a secure purchase.
If you buy a property that already has a lien on it, you are legally responsible for that debt, even if you didn't take it out. Liens are attached to the property, not the person, so they stay with the property unless they are specifically released during the closing process. Most mortgage lenders won't give you money to buy a property with unresolved liens because the lien holder could eventually foreclose or force a sale to pay off the debt. In real life, the seller must either pay off the liens before closing (usually with money from the sale), come to an agreement on how to handle them, or the purchase agreement must say how they will be handled. Title insurance protects you from liens that weren't found during the title search, but it won't protect you from liens that were found and you agreed to pay. That's why it's very important to do a full lien search before agreeing to buy.
The length of a lien depends a lot on the type and where it is. Most homeowners have to pay off their mortgage or refinance it to a new lender within 15 to 30 years. The IRS can put federal tax liens on your property for up to ten years, but they can be renewed forever if you don't pay the debt. Tax liens from the state and local governments stay in place until the taxes are paid, and in many places, they never go away. Depending on state law, judgment liens usually last 5 to 20 years. However, they can usually be renewed before they expire, which means they stay in place until they are paid off. Mechanic's liens last the shortest time, usually only 1 to 2 years. However, if the contractor files a lawsuit during that time, the lien changes to a judgment lien, which lasts much longer. Even after liens are legally expired or paid off, they may still be on public records until someone files formal release documents. This is why you might find liens that are ten years old during title searches that should have been released years ago.
Yes, lien holders often agree to settlements for less than the full amount, especially if they don't want to pay anything or have to go to court to get the money. Contractors who have mechanic's liens may agree to pay 60–80% of the original amount to avoid going to court, especially if the liens are old. Sometimes, judgment lien holders will accept 50–70% to settle the case. The IRS even has "Offer in Compromise" programs that can help you pay off your tax debt in some cases. The key to a successful negotiation is showing that your offer is the best outcome the lien holder can realistically expect. If the lien is several years old, the property's value wouldn't cover full payment in foreclosure, legal collection would cost the lien holder a lot of money, or the debtor (the person who used to own the property) doesn't have many assets, your negotiating position is stronger. Always get written settlement agreements that spell out the terms of the release. Before closing, make sure you see the lien release recorded in county records. Don't believe what someone says or think that a lien will be released just because you paid it. Get proof in writing.
A lien is a legal claim on property that protects a debt, and a levy is the actual taking of property to pay off that debt. A lien is like a warning or hold. It gives the creditor the right to get paid from the value of the property, but you still own the property. The lien holder can't just take your house; they have to go through foreclosure or legal action to force a sale. On the other hand, a levy is when the creditor actually takes control of or seizes assets. For example, the IRS could put a tax lien on your property (the claim), and if you don't pay, they could then issue a levy and actually take your bank account, take money from your paycheck, or force the sale of your house (the enforcement). The lien comes first and gives the right; the levy comes second and uses that right. When you buy or sell real estate, you almost always have to deal with liens instead of levies. This is because the lien stops the clear title transfer, which means the problem has to be fixed before the sale can go through.
No, and this is one of the most dangerous myths in real estate. Most liens show up on full title searches, but some liens can get past them. Standard county records don't always show municipal liens for code violations, unpaid utilities, or special assessments. Instead, they are kept in separate municipal databases. It might take a few days or weeks for documents to be processed and indexed, so liens that were just filed might not show up yet. Mechanic's liens have filing windows after the work is done. This means that if the work is done 30 to 60 days before your title search, the liens could be filed after the closing. State authorities file federal tax liens, but if there are name differences or more than one jurisdiction, cross-referencing can miss them. Sometimes, HOA liens don't show up in county records until the association goes to court. This is why title insurance exists: it protects you from liens that weren't found during the search. The American Land Title Association says that title professionals find problems with 25% of all titles. The search process is very accurate (less than 10% of claims are wrong), but it isn't perfect.
If you bought title insurance (which most mortgage lenders require), you should call your title insurance company right away. Title insurance protects you from liens that weren't found during the search process but should have been found before closing. To file a claim, you need to show proof of the lien, your purchase agreement, and the original title search report. The insurance company will either pay off the lien, fight claims against you, or pay you up to the limits of your policy. If you didn't buy title insurance, you'll have to deal with the lien on your own. First, ask the lien holder for proof that the lien is valid. This will show that the debt is real, the amount is correct, and it is properly attached to your property. Talk to a real estate lawyer about your options: you could challenge the lien's validity if there were mistakes in the process, work out a deal with the lien holder, or even sue the seller if they knew about the lien and didn't tell you. If the closing company or escrow agent was careless in their title search, you might be able to get money back from them in some cases. Act fast—ignoring liens won't make them go away, and they could lead to foreclosure or the forced sale of your home.
The cost depends on how deep the search is and who does it. Most of the time, you can search for county public records for free online. However, some counties charge $1–5 for copies of official documents. Title companies or abstractors charge $150 to $300 for professional title searches when bought separately, but most buyers get them as part of title insurance, which costs 0.5% to 1% of the purchase price and is included in the closing costs. Title insurance costs $1,750 to $3,500 for a $350,000 home, and that includes a full title search. Real estate lawyers charge between $500 and $1,500 for their services, which include looking up liens and giving advice on how to settle them. Depending on where you live, municipal lien certificates can cost between $50 and $200. If you're doing a lot of research, plan on spending $2,000–4,000 for a full title search, title insurance, an attorney review, and municipal certificates. But this investment protects you from finding six-figure liens that could be very bad. The Urban Institute says that title search services alone cost less than $200, but combining search with insurance gives you full protection at a price that is reasonable compared to the value of the transaction.
Yes, for sure. Liens don't stop you from putting your house up for sale or accepting an offer, but they do stop you from closing the deal. When the title is transferred, it must be "clear," which means that all liens have been paid off or released. Mortgage lenders won't give buyers money for properties that have liens that haven't been paid off yet because those liens could put the lender's security interest at risk. Even cash buyers usually won't close until the liens are paid off because they don't want to take on someone else's debts. In real life, the sale proceeds pay off liens at closing. For instance, if you owe $200,000 on your mortgage, have a $15,000 mechanic's lien, and sell for $350,000, the money from the sale will pay off both liens, and you will get the rest of the money, which is $135,000 minus closing costs and commissions. When the liens are more than the sale price, things get complicated. For example, if you owe $275,000 on liens but the house only sells for $250,000, you will need to bring $25,000 to closing. This is known as a "short sale," and the lien holder must agree to it. Some sellers are able to negotiate lower payoffs with lien holders so that they can make sales.
A lien waiver is a paper from a contractor, subcontractor, or supplier that says they have been paid in full and won't file a mechanic's lien against the property. When buying a new home or a home that has been recently renovated, these waivers are very important. If you don't get lien waivers, contractors can still file mechanic's liens even after the work is done and you've closed on the property. This is because they have a legal window of time (usually 60 to 120 days, depending on state law). There are two kinds: conditional lien waivers, which only go into effect when the payment clears (when the contractor gets the money), and unconditional lien waivers, which go into effect right away no matter what the payment status is. Before closing, buyers should always ask for unconditional final lien waivers from all contractors, subcontractors, and material suppliers. This is especially important for newly built homes, major renovations or additions that were finished within the past year, properties that investors flipped and hired contractors to work on, and any work that needed building permits. I've seen too many buyers surprised by mechanic's liens of $15,000 to $30,000 that were filed months after closing because they didn't check to see if the flipper really paid all the contractors. Lien waivers show that workers were paid and fill in this dangerous gap.
Depending on their priority, foreclosure cancels some liens but not others. When a first mortgage goes into foreclosure, it gets rid of junior liens like second mortgages, most judgment liens, and mechanic's liens that were filed after the first mortgage. But it doesn't get rid of senior liens. Property tax liens almost always stay in place after foreclosure because they have super-priority status, which means they get paid before the mortgage that is being foreclosed on. Also, some HOA liens may stay on the property after foreclosure, depending on the laws of the state. Federal tax liens from the IRS usually stay on the property as well. This makes things more complicated when buying properties that have been foreclosed on. The lender who is foreclosing on the property might say it's worth $150,000, but if there are $35,000 in property tax liens and $20,000 in IRS liens, the real cost is $205,000. With the rise in foreclosures in 2025—93,953 properties filed for foreclosure in Q1 2025, an 11% increase from the previous quarter—more distressed properties are coming onto the market with complicated lien situations. Always do thorough title searches on foreclosed properties, and make sure to ask for information about all liens that stayed in place after the foreclosure. The bank that is foreclosing may not even know about any municipal or tax liens that are still in place. This is why you need to do your own research.
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