If you’re considering investing in the U.S. real estate market, it’s important to understand the concept of liens and how it can affect your investments.

In this article, we will explain in a clear and simple way what liens are, how they work and what implications they have for your real estate investments.

What is a lien?

This word is a legal term that refers to a right or claim on real property. In simpler terms, it is a financial burden that falls on a property and is usually related to the payment of taxes, loans or debts.

When a property has a lien, this means that there is an economic obligation that must be paid. This must be done before the owner can dispose of the property.

Types of levies

There are several types of liens that can affect home buying in Florida. Each may have different implications for the owner of the property. Therefore, it is important to know them before making any real estate transaction. Next, we will mention the most common:

  • Tax liens. These are related to the payment of property taxes . Local governments tax property owners to fund public services. Among them, schools, streets, parks, among others. If a homeowner fails to pay their taxes, the government can impose a tax lien on the property (IRS, 2023).
  • Mortgage liens. They are economic obligations that originate through a mortgage loan. When a homeowner applies for a loan to purchase a property, the lender usually requires collateral. This implies that, if the homeowner does not repay the loan, the lender can apply for this mortgage fee and take possession of the property.
  • Creditors’ liens. They arise when an owner has debts to third parties, such as service providers or contractors. If the homeowner fails to pay these debts, creditors can impose a lien on the property (Associates Home Loan, 2020).
Tax: what it is, what rates exist and when it applies | PFS
Tax: what it is, what rates exist and when it applies | PFS

Implications for real estate investments

Now, it’s important to understand how this can affect buying property in Miami. When you are starting this process, you should investigate if there are liens on the property. If you acquire it with an outstanding charge, you will become responsible for that debt, affecting your cash flow and limiting your options for sale or refinancing in the future.

It is essential to conduct thorough research before buying a property. Hiring a real estate specialist can help you identify any existing taxes and assess their impact on your investment.

In addition, it is important to note that levies have priorities. This means that some rank higher than others and must be paid first in case of execution. For example, tax obligations tend to have a higher priority than mortgage obligations. This can affect the order in which debts are paid in case of foreclosure or sale of the property.


Remember that having the right advice can make all the difference in the success of your real estate investments. So don’t hesitate to have a professional guide in the process of looking for your new property in the United States. Contact our advisors and let us guide you with the best advice.

References

Associates Home Loan. (2020). What is a lien on a home? Here’s what you should know about property liens. Associates Home Loan.


IRS. (2023). How to understand a federal tax lien. IRS.