Understanding property liens: types, how they affect a sale and how to clear them

Written by Samantha SheltonNMLS 1647301Updated October 2026

A property lien is a legal claim against real estate that secures a debt, and it generally has to be paid or released before ownership can transfer with clear title. Priority is what makes liens dangerous: property tax liens generally sit ahead of even a first mortgage, and in Michigan unpaid taxes run a three-year forfeiture-and-foreclosure cycle ending with the county holding title free of every recorded lien.

Liens come in two flavors: voluntary ones you agree to, like your mortgage, and involuntary ones that attach without consent, property tax, federal tax, judgment, construction and HOA liens. Most surface during the title search, and in a normal sale they’re paid out of the seller’s proceeds. Learn how property liens work, which types attach to a home, how priority decides who gets paid, and the steps to clear a lien before closing. If you’re earlier in the process, start with our Home Buying guide.

Key takeaways:

• Liens fall into 2 categories: Voluntary liens like your mortgage are ones you sign for; the 5 common involuntary types, property tax, federal tax, judgment, construction and HOA, attach without the owner’s agreement.
• Property tax liens outrank the mortgage: Fannie Mae treats unpaid real estate taxes as an unacceptable title impediment, and Michigan’s 3-year tax forfeiture process ends with county title not subject to any recorded or unrecorded lien.
• The title search is your detection system: Most liens are paid from the seller’s proceeds at closing, but start payoff work the day the title commitment lands, a routine release takes days to weeks, and the IRS asks for a lien discharge application at least 45 days before the sale.

What is a property lien?

A property lien is a recorded legal claim that attaches to real estate as security for a debt, giving the lienholder the right to be paid out of that property before the owner keeps anything. It attaches to the property itself, not just the person who owes the money. Which is why one owner’s unpaid debt can become the next owner’s problem if nobody clears it.

That’s the whole reason “clear title” matters. A conveyance in real estate transfers ownership, but only what the seller actually has. If three creditors hold recorded claims, the buyer inherits a house with three creditors attached unless those claims are released first.

Think of a lien like a sticky note stapled to the deed: when the property changes hands, this debt gets settled out of the money. Nolo’s legal explainer on property liens covers the underlying mechanics.

What types of liens can attach to a home?

Six lien types account for nearly everything on a residential title commitment, and the mortgage is the only one most owners sign up for on purpose.

The federal tax lien is the one buyers misunderstand most. It exists once the IRS assesses the liability, sends a Notice and Demand for Payment, and the taxpayer neglects or refuses to pay. The IRS then files a public Notice of Federal Tax Lien alerting creditors that the government has a legal right to the property, and releases it within 30 days once the debt is paid in full.¹

How does a lien affect a home purchase?

A lien doesn’t usually kill a purchase, it delays it and shifts the closing math. Your lender needs its mortgage recorded in first position behind nothing but property taxes, so every other claim has to be paid, released or formally excepted before the loan funds. Three things follow:

• The title company issues an exception: Each claim appears on the commitment’s exceptions schedule and must be cleared before the policy will insure over it.
• The closing date moves: Payoff statements have to be requested, verified in writing and often re-dated, and lienholders don’t work on your timeline. It’s the most common reason a clean file slides a week.
• The seller’s net shrinks: If the liens plus the mortgage payoff plus selling costs exceed the sale price, the seller brings cash or the deal restructures.

For buyers, the real risk isn’t paying someone else’s debt at the table, it’s an undiscovered lien surfacing after you own the home. The CFPB is direct about that exposure: legal claims can arise “from a previous owner’s failure to pay taxes, or from contractors who say they were not paid for work done on the home before you purchased it.” Our guide to the home buying process maps where title work sits in the timeline.

Which liens get paid first? Lien priority explained

Property tax liens generally take first position, ahead of even a first mortgage. Which is why unpaid taxes are the most dangerous claim attached to a house you want to buy. Fannie Mae treats them as an unacceptable title impediment and won’t purchase a loan secured by a property carrying one.

Michigan’s statutes show the hierarchy plainly. Under the Condominium Act, an association’s assessment lien comes before other liens except tax liens in favor of any state or federal taxing authority and sums unpaid on a first mortgage of record. Under Michigan’s judgment lien statute, a recorded judgment lien outranks later-recorded liens except a purchase money mortgage, construction lien claims, association assessment liens arising from recorded restrictions, and state or federal tax liens.²

The consequence of ignoring a tax lien is the part most buyers never hear. When a Michigan tax foreclosure runs to judgment, fee simple title vests absolutely in the foreclosing governmental unit, and that title is not subject to any recorded or unrecorded lien. The mortgage doesn’t survive it.

Priority rules vary by state, so talk with a real estate attorney about a specific title before relying on general ones.

How to find out if a property has a lien

Three sources surface essentially every recorded claim, and on a financed purchase the first happens automatically. Run all three if you’re buying an investment property, buying from a distressed seller, or paying cash.

1. Order a title search through a title company or attorney

The searcher examines the chain of title and produces a title commitment listing every recorded claim as an exception. Read that exceptions schedule yourself instead of assuming someone else did, it tells you what you’re actually buying. Our guide to choosing a title company covers what separates a responsive one from a slow one.

2. Search the county register of deeds

Mortgages, judgment liens, construction liens and association liens are all recorded with the register of deeds (the recorder’s office in many states) in the county where the property sits. Most Michigan counties offer online searches by address or parcel number.

3. Check county treasurer records for delinquent taxes

Delinquent property taxes don’t always show up in the deeds index, because the tax lien arises by operation of law rather than by someone recording a document. In Michigan, real property taxes generally become a lien on December 1, a city or village charter can set a different date, and that lien continues until paid. Ask the county treasurer for the delinquent balance on the parcel.

How do you clear a lien before closing?

Most liens clear the same way: the title company requests a written payoff, pays the lienholder from the seller’s proceeds at the closing table, and records the release. Those payoffs aren’t hidden. Federal rules require the seller’s side of the settlement summary to itemize “Payoff of First Mortgage Loan” and “Payoff of Second Mortgage Loan” separately, plus any other obligations the seller must pay at closing, including lien-related payoffs, and the official commentary names satisfaction of outstanding federal, state or local tax liens as an example. That’s where lien payoffs appear on your Closing Disclosure, the form your lender must deliver three business days before closing.

Hypothetical example, not an offer. Say a Waterford home sells for $265,000 and the title search turns up a $182,000 mortgage payoff, $6,400 in delinquent property taxes and a $9,000 construction lien from a roof replacement. All three are paid from the seller’s side at closing, in priority order, and the buyer’s cash to close doesn’t change.³ The deal only breaks if the liens plus costs exceed the sale price.

Three situations need more than a payoff request:

• Federal tax liens: A seller who can’t pay the IRS in full can apply for a certificate of discharge, which removes the government’s lien from the property named in it so the sale can close. The application is Form 14135, and the IRS asks that it be submitted at least 45 days before the transaction date.⁴
• Disputed or stale liens: A contested contractor lien means negotiating, bonding over it, or letting a court sort it out. A paid-off debt whose release was never recorded still shows as an exception until the old lienholder is tracked down.
• Liens exceeding the sale price: This becomes a short sale or a negotiated lien reduction. Our guide to selling a home with a lien covers the seller’s side.

What can the IRS do besides a full payoff before closing?

The IRS page on understanding a federal tax lien (last reviewed September 14, 2026) describes a subordination, which lets other creditors move ahead of the IRS, and a withdrawal, which removes the public notice while the taxpayer stays liable. Per the IRS page, someone who owes $25,000 or less, or pays the balance down to $25,000, can ask for withdrawal under its direct debit option. For a sale, discharge is the usual route: under 26 U.S.C. 6325(b), the IRS may discharge property when what stays under the lien is worth at least double the unpaid liability plus prior liens, or when sale proceeds are held as a fund subject to the government’s claims. The Taxpayer Advocate Service notes the IRS answers with Letter 4025, and a denial can be appealed through the Collection Appeals Program.

What should a payoff statement show, and how do closing scams use it?

For a mortgage, Regulation Z at 12 CFR 1026.36(c)(3) requires the creditor or servicer to send an accurate statement of the total needed to pay the loan in full as of a specified date, no more than seven business days after a written request from the borrower or someone acting for the borrower. Ask the seller’s side when each payoff was requested, so a slow lienholder shows up early. Then guard the money: the CFPB’s mortgage closing checklist warns that closing funds are tempting targets for scammers and that emails with last-minute changes to payment or wire instructions may be a scam. Call your title company at a number you already know before sending anything. Our guide to preparing for closing covers the rest of closing week.

How can buyers protect themselves from liens?

Your protection is two documents deep: the title commitment’s exceptions schedule before closing, and an owner’s title policy after it. Work both.

• Read every exception on the commitment: Get it as early as your contract allows and read Schedule B line by line. Ask which exceptions will be cleared before closing and which survive into your policy. That distinction is the whole ballgame.
• Confirm payoffs in writing: Ask whether every lienholder gave a written payoff figure with a good-through date. Verbal numbers move.
• Buy the owner’s policy: Lenders generally require a lender’s policy, but the CFPB is clear that it protects the amount they lend, not you. An owner’s policy is optional and protects your own investment against claims predating your purchase. Our guide to title insurance and why it’s important breaks down what each covers.
• Ask for an update search: A final search close to the recording date catches anything filed after the original.

This system works because recorded claims are searchable and the industry is built to clear them, the American Land Title Association publishes standards on how the title industry clears recorded claims.

What Michigan buyers should know

Michigan’s lien rules run on three clocks that decide how much time you actually have.

• Delinquent property taxes run a 3-year cycle: Michigan Treasury describes real property tax delinquency as a three-year forfeiture and foreclosure process. Parcels are forfeited to the county treasurer in the second year of delinquency, and taxes still unpaid as of March 31 in the third year are foreclosed by the foreclosing governmental unit. Title then vests absolutely in the county, not subject to any recorded or unrecorded lien.
• Construction liens have a 90-day recording deadline: Under Michigan’s Construction Lien Act, the right to a construction lien ceases to exist unless a claim of lien is recorded with the register of deeds within 90 days after the claimant’s last furnishing of labor or material. Subcontractors and suppliers must also serve a notice of furnishing within 20 days after first furnishing, and foreclosure can’t be brought later than 1 year after recording.
• Judgment liens expire after 5 years: A Michigan judgment lien expires 5 years after recording and may be rerecorded only once, by recording a second certified notice at least 120 days before that expiration. It also doesn’t attach to property owned as tenants by the entirety unless the judgment was entered against both spouses.

All three are searchable through the county register of deeds, and delinquent tax balances come from the county treasurer.⁵

What does an unpaid Michigan property tax bill grow into?

Michigan Treasury’s real property tax forfeiture and foreclosure timeline (checked October 2026) shows how a missed bill builds. According to Treasury, on March 1 after the tax year the county treasurer takes over the unpaid taxes and adds a 4% administration fee plus interest of 1% per month, not compounded. A $15.00 fee is added to the parcel on October 1. On March 1 of the second year the property is forfeited to the county treasurer, a $175.00 fee is added, and additional interest of 0.5% per month runs from the forfeiture date.

Hypothetical example, not an offer. Say $3,000 of a seller’s property taxes went unpaid. This applies Treasury’s percentages to the $3,000 alone; the county treasurer’s payoff figure controls, and recording and notice fees come on top.

Source: Michigan Department of Treasury, Real Property Tax Forfeiture and Foreclosure Process, checked October 2026; MCL 211.78g as amended by 2026 PA 79. Here the balance runs about 40% above the original $3,000 bill.

After redemption ends, per the Treasury timeline, the first public auction is held the third Tuesday in July and a second at least 28 days later. Before bidding on one of those homes, read our guides to the foreclosure process for buyers and buying a home at auction.

Why can’t a Michigan deed be recorded while taxes are unpaid?

Michigan builds a tax check into recording itself. Under MCL 211.135, a register of deeds must require certificates showing whether the state, county or local treasurer holds any tax liens or tax titles against the property, and that all taxes on it have been paid for the 5 years preceding the date of the deed or land contract. Without those certificates, the instrument is not recorded. Oakland County’s fees and forms page, for example, says warranty deeds and land contracts must be tax certified at the Oakland County Treasurer’s Office first.

One gap: a deed presented on or after March 1, before the local treasurer returns that year’s delinquent taxes, gets a certification noting the current return was not available, and it still records (MCL 211.135(3)). Ask the local treasurer for the current bill as well. Our guide to property tax assessments explains those bills, and the Michigan property tax calculator looks up the published millage for an address.

How does a paid-off mortgage come off the county record in Michigan?

Michigan puts that paperwork on the lender. MCL 565.41 requires the mortgagee, or its successor or assignee, to prepare a discharge, file it with the register of deeds in the county where the home sits, and pay the recording fee. The deadline in MCL 565.44, as amended by 2004 PA 447 (effective December 27, 2004), is now 60 days, and a mortgagee that has been asked and offered its reasonable charges but refuses or neglects to discharge in that time is liable for $1,000.00 in damages plus actual damages. That is the lever when a paid mortgage still shows open on a title commitment.

County search tools differ. Oakland County’s Property Records Search portal runs on the Super Index at ocmideeds.com, and starting July 1, 2026 its Acreage Book Search moved there and remains free of charge. Oakland’s online fee schedule, effective November 1, 2025, keeps searching the index free for all users and charges $5.00 per transaction plus a $1.00 per page document charge to buy copies. Genesee County’s online records search notes that records before 1983 are not accessible online.

What protects a Michigan homeowner from a subcontractor’s lien?

Under MCL 570.1107, a construction lien cannot exceed the claimant’s contract amount less payments made on that contract. MCL 570.1110 requires a contractor to give the owner a sworn statement listing each subcontractor and supplier and what each is owed, when payment is due and whenever the owner demands one.

Under MCL 570.1115, a claimant paid in full must give the owner a full unconditional waiver of lien, and a conditional waiver takes effect only when the amount shown in it is paid. On a residential structure, an owner may not rely on a waiver supplied by someone other than the claimant named in it, when that claimant has filed a notice of furnishing, until the owner verifies it with the claimant in writing, by telephone or in person.

Owners who already paid have one more defense. Under MCL 570.1118a, added by 2010 PA 147, a construction lien does not attach to a residential structure, to the extent payments were made, if the owner files an affidavit with the court that the contractor was paid under the contract, with proof of payment such as a canceled check. If the seller had recent work done, ask for the sworn statement and waivers before closing; our guide to managing home repairs during escrow covers the timing.

When does a condo association lien move ahead of a mortgage in Michigan?

The usual order, association behind a first mortgage of record, has one exception. MCL 559.208(1) gives past due assessments evidenced by a recorded notice of lien priority over a first mortgage recorded after that notice. For a condo buyer, an association notice of lien recorded before your lender’s mortgage is one your lender will want paid at closing. The lien can also carry interest, collection and late charges, attorney fees and fines allowed by the condominium documents, so ask the association for a written statement of everything owed on the unit, not just the dues. Our guides to buying a home with an HOA and condominium financing cover the rest of a condo purchase.

How do liens and transfer taxes change a Michigan seller’s net?

Hypothetical example, not an offer. Carry the Waterford sale above one step further. Michigan’s state transfer tax is $3.75 for each $500 or fraction of $500 of value under MCL 207.525, and the county tax is 55 cents per $500 in a county with fewer than 2,000,000 people under MCL 207.504. Michigan Treasury’s State Real Estate Transfer Tax page says the seller is legally responsible for the state tax, though some buyers and sellers agree the buyer will pay it.

Source: transfer tax rates from MCL 207.525 and MCL 207.504, Michigan Compiled Laws complete through PA 114 of 2026; lien figures from the hypothetical Waterford example above.

A seller claiming the principal residence exemption may owe no state transfer tax when the home’s state equalized value is no higher than it was at purchase, under MCL 207.526(u). The Michigan transfer tax calculator and the seller net sheet calculator run these lines with your own numbers; see also what a seller net sheet is.

FAQ: Property liens and home buying

Here are answers to common questions about property liens and home buying.

How do I find out if a property has a lien?

Order a title search through a title company or real estate attorney, which is standard on any financed purchase. You can also search county register of deeds records yourself and check treasurer records for delinquent taxes. A title commitment lists every recorded claim as an exception, and each has to be cleared before closing. Understanding the role of a closing attorney tells you who to ask for what.

Can you buy a house that has a lien on it?

Yes, and it happens routinely. Most liens are simply paid off from the seller’s proceeds at closing, coordinated by the title company. The problem arises when liens exceed the sale price or a lienholder disputes the amount. Then the closing can stall, so ask early whether all payoff figures are confirmed in writing. See how title clearance fits into the wider home closing process.

What is a mechanic’s lien?

A mechanic’s lien, called a construction lien in Michigan, is filed by a contractor, subcontractor or supplier who wasn’t paid for work on the property. It attaches to the property rather than to the person who owed the money, so it can follow the home to a new owner if it’s never released. Sellers usually clear these with a lien waiver and payoff at closing, and an owner’s title insurance policy protects you if one surfaces afterward.

How long does it take to remove a lien?

A straightforward payoff and recorded release can take a few days to a few weeks, depending on the lienholder and county recording times. Judgment liens and disputed contractor liens take longer, because they may require negotiation, a court filing or a formal release. Start as soon as the title commitment is issued rather than in closing week, a responsive title company is worth a lot here.

Can someone put a lien on your house without you knowing?

Yes. Involuntary liens attach without your signature, but Michigan requires notice for some. A construction lien claimant must serve a copy of the recorded claim of lien within 15 days after recording, personally or by certified mail, under MCL 570.1111(5). Some counties add alerts: Ottawa County’s register of deeds lets owners sign up free to be notified when a document might have been fraudulently recorded under their name.

Do liens show up on your credit report?

Not on reports from the nationwide credit bureaus anymore. The CFPB reported that new reporting standards removed all civil judgments and almost half of tax liens from those credit reports in July 2017, and that by April 2018 no tax liens remained; bankruptcies are now the only public record on them (CFPB, December 10, 2019). A recorded lien still sits on the property’s title, where a title search finds it.

How much does it cost to record a lien release in Michigan?

Usually $30.00 per document. MCL 600.2567 sets the register of deeds fee at $30.00 to record a document regardless of page count, plus $3.00 for each additional instrument a single document discharges. Genesee County’s fee schedule and Livingston County’s fee schedule both list a $30.00 flat fee. A charter county may set its own schedule, capped at the cost of the service.

Does a federal tax lien reach a home the taxpayer buys after it is filed?

Yes. Under 26 U.S.C. 6321, the lien attaches to all property and rights to property belonging to the taxpayer, and the IRS page on understanding a federal tax lien says it also covers future assets acquired while the lien lasts. A home bought after the Notice of Federal Tax Lien is recorded can carry it from the day the deed is recorded, so a title search on a refinance or a later sale will find it.

The bottom line on property liens

A property lien is a legal claim against real estate that secures a debt, and it generally must be paid or released before ownership transfers with clear title. Liens are either voluntary, like the mortgage you sign, or involuntary, property tax, federal tax, judgment, construction and HOA liens. Priority decides who gets paid: property tax liens generally sit ahead of even a first mortgage, and Michigan’s three-year tax forfeiture cycle ends with county title not subject to any recorded or unrecorded lien. The title search is your detection system, and most liens are paid from the seller’s proceeds at closing so the buyer receives clear title.

If you’re ready to buy a home and want financing that won’t buckle when a title issue turns up, talk to Align Lending. We’ll shop your scenario across our lender network, show you the numbers side by side, and work with your title company so payoff problems don’t delay your closing. Call 248-506-5727 or start online.

Footnotes:

1. This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Federal tax lien rules, release timelines, and collection procedures are set by the IRS and are subject to change. Consult a qualified tax professional about your specific situation. Return to text.

2. Lien priority is governed by state law and by the specific facts of each title, including how title is held and the order in which claims were recorded. The statutory rules summarized here are Michigan’s and are subject to change. Nothing here is legal advice, consult a licensed Michigan real estate attorney about a specific property. Return to text.

3. Example figures are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Actual payoff amounts, seller proceeds, and cash to close depend on the property, the recorded claims against it, your application, and market conditions. Return to text.

4. Eligibility for a certificate of discharge, subordination, or withdrawal of a federal tax lien is determined solely by the IRS, and processing times are not guaranteed. Align Lending does not provide tax advice or represent taxpayers before the IRS, consult a qualified tax professional or attorney. Return to text.

5. Michigan statutory deadlines, recording requirements, and tax forfeiture timelines are set by state law and county practice and are subject to change. Deadlines can be shortened or affected by facts specific to a property. Confirm current requirements with the county register of deeds, the county treasurer, or a licensed Michigan attorney. Return to text.

Sources: federal tax lien creation (assessment, Notice and Demand for Payment, and neglect or refusal to pay), the Notice of Federal Tax Lien as public notice to creditors, and release within 30 days of full payment, Internal Revenue Service, “Understanding a Federal Tax Lien.” Certificate of discharge under Internal Revenue Code § 6325(b), Form 14135, and the request to apply at least 45 days before the transaction date, IRS Publication 783 (Rev. 12-2022). Seller-side itemization of “Payoff of First Mortgage Loan,” “Payoff of Second Mortgage Loan,” and other lien-related payoffs, and the Closing Disclosure three-business-day delivery requirement, Regulation Z, 12 CFR § 1026.38(k)(2)(v), (vi) and (viii) and official commentary, and the Consumer Financial Protection Bureau. Lender’s versus owner’s title insurance and the sources of legal claims against title, Consumer Financial Protection Bureau, “What is owner’s title insurance?” Unpaid real estate taxes as an unacceptable title impediment, Fannie Mae Selling Guide B7-2-05. Michigan three-year forfeiture and foreclosure process, Michigan Department of Treasury, “Property Tax Forfeiture and Foreclosure”; General Property Tax Act, 1893 PA 206. Real property tax lien attaching December 1, or on the date provided by a city or village charter or by section 40a, and continuing until paid, MCL 211.40. Title vesting absolutely in the foreclosing governmental unit free of any recorded or unrecorded lien, MCL 211.78k(6). Construction lien 90-day recording deadline, MCL 570.1111(1); 20-day notice of furnishing, MCL 570.1109(1); one-year foreclosure deadline, MCL 570.1117(1). Judgment lien five-year expiration, single rerecording, and tenants-by-the-entirety limitation, MCL 600.2807 and MCL 600.2809. Condominium association assessment lien priority, MCL 559.208(1).

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Lien law, priority rules, and recording requirements vary by state and by the facts of each title; have a licensed real estate attorney or title professional review your specific situation. Program terms and figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.

Related resources

20-minute read

The home appraisal process: What to expect

Learn how the home appraisal process works, from the lender’s order to the final report, including typical costs of $300 to $1,500 and what appraisers check.

Read more

20-minute read

Home inspection checklist for buyers: What to look for room by room

See the complete home inspection checklist for buyers, from foundation to attic, so you can spot costly problems before you close on your next home.

Read more

19-minute read

How to prepare for a home closing: your step-by-step checklist

Learn how to prepare for a home closing with a step-by-step timeline, documents to bring, and final walk-through tips for a smooth closing day.

Read more