When you’re preparing to close on a home in New Jersey, one critical step you cannot ignore is clearing any liens on a property. A lien is a legal claim against a person’s property to secure payment of a debt owed.
These claims can stem from unpaid property taxes, missed mortgage payments, court judgments, or even contractor disputes. If left unresolved, a lien affects your ability to transfer clean title, complicates real estate transactions, and can delay or derail a closing entirely.
For both buyers and sellers, understanding how to deal with property liens is essential to protect your interests and avoid surprises at the closing table.
What Is a Lien on Real Estate Property?
A lien on your property gives a creditor a legal right to your real estate or personal property as collateral for a debt obligation. In New Jersey, different liens can be properly docketed in county records offices or through the Superior Court, depending on the lien type.
Here are common examples of liens on a property:
- Mortgage lien – When a lender places a lien to secure a mortgage loan.
- Property tax liens – Placed by the municipality for unpaid property taxes.
- Federal tax lien – Filed by the IRS when a property owner fails to pay taxes.
- Judgment lien – Entered after a court awards money damages in a civil lawsuit.
- Mechanic’s lien – Filed by contractors for unpaid work or materials.
- Child support liens – Filed against a debtor’s property when a former spouse is owed past due support.
Liens can be voluntary, like a mortgage, or involuntary liens, like a tax lien or judgment lien. Once recorded in public records, they follow the real property even if the parties involved change.
Why Clearing Liens Matters Before Closing
A property with an unresolved lien is considered to have a “clouded title.” Most title companies will not issue title insurance until all outstanding debt or legal claims are resolved. This holds up the entire real estate deal.
If you’re a buyer conducting due diligence or a seller trying to transfer clean title, it’s crucial to resolve any lien filing before the foreclosure process or closing moves forward. Failure to do so may lead to foreclosure proceedings, reduced buyer confidence, or even cancellation of the sale.
Run a Thorough Title Search
A title search is performed to uncover any lien on your property.
This includes checking property records at the county records office and court systems for:
- Law division judgments
- IRS liens
- Tax liens
- Mechanic’s liens
- Judgment liens
Title companies and real estate attorneys are equipped to perform this search and flag issues early. Buyers should always ensure the property address is checked for any legal claim recorded against it.
Identify the Lien Holder and Confirm Debt
Once a lien is discovered, it’s essential to contact the lien holder to verify:
- The debt owed
- Interest, penalties, or fees
- Payment instructions
- Documents needed for a lien release
If the lien stems from missed payments on a home equity loan, mortgage loan, or property taxes, gather all relevant financial documents to verify the accuracy of the claim.
Satisfy the Debt and Secure a Lien Release
To clear the lien, the property owner must pay the debt in full. For large debts, negotiating a settlement may be possible.
Once paid:
- Request a lien release (also called a Satisfaction of Judgment or Certificate of Cancellation)
- Ensure it is filed with the appropriate county records office or judicial district court
Without this formal lien release, the lien remains enforceable—even if the debt has been resolved.
File and Record the Lien Release
The final step is to record the lien release in the correct jurisdiction. This updates the public records and clears the title for closing. Be sure to verify that the release is correctly indexed with the property address and parties involved.
Failing to file the release could jeopardize your sale later—even if the debt obligation was satisfied.
What If the Lien Is Disputed or Cannot Be Cleared?
Sometimes, a property owner disputes the validity of a lien—especially with judgment liens, child support liens, or mechanic’s liens.
If you believe the lien is wrongfully placed, you may:
- Challenge the lien filing in court
- File a quiet title action to remove the legal claim
- Seek mediation with the other creditors
These disputes may delay closing, so early legal intervention is essential. An experienced real estate attorney can help resolve complex lien disputes quickly and effectively.
Tips to Avoid Liens on Your Property
If you own real estate property, you can reduce the risk of liens by:
- Paying property taxes on time
- Making consistent mortgage payments
- Settling disputes with contractors in writing
- Monitoring property records for unusual activity
- Keeping proof of payment for all financial assets and services
Self-employed individuals should also be vigilant about IRS payments to avoid federal tax liens that can impact bank accounts or real estate owned.
When to Hire a Real Estate Attorney
Clearing a lien on your property isn’t always simple. If you’re facing:
- Multiple different liens
- A pending foreclosure process
- Sale of a real estate asset with a lien type you don’t understand
…then it’s time to speak with a qualified real estate attorney.
The Law Office of Kristen E. Johnson, Esq. has deep experience handling property liens, tax liens, and judgment liens throughout Monmouth and Ocean County, New Jersey.
We can help you:
- Investigate properly docketed liens
- Negotiate with lien holders
- Secure and file official lien releases
- Clear title and move your transaction forward
Our Areas Of Practice
Every real estate transaction hinges on clear title. Unresolved liens on a property—whether from taxes, missed mortgage payments, or money damages—can create costly roadblocks for buyers and sellers alike.
By understanding the types of property liens, the steps to remove them, and when to bring in legal help, you’ll protect your investment and ensure a successful closing.
