How to Check for Liens on an Investment Property (And What They Mean for Investors)

When navigating the real estate market as an investor, your success depends on due diligence. That means going beyond curb appeal and comps—you need to understand the legal and financial status of every property you consider.

One of the most important steps is learning how to check for liens on a property. A lien can significantly affect the property’s value, your ability to close, and your future plans for the investment.

In this guide, we’ll walk you through what liens are, how they work, what they mean for investors, and—most importantly—how to find them before making an offer.

What Is a Lien?

A lien is a legal claim or encumbrance on a property. It allows a third party (usually a creditor) to retain interest in the property until a debt or obligation is paid.

Liens are generally categorized as either:

• Voluntary (e.g., a mortgage you agreed to)
• Involuntary (e.g., a tax lien or contractor lien placed without your consent)

While not all liens are inherently bad, they do indicate that someone else has a financial interest in the property—one that could interfere with your ownership rights.

Common Types of Property Liens

1. Mechanic’s Liens
Filed by contractors, suppliers, or laborers who performed work on a property but were not paid. It’s a common lien and often tied to renovation work.

2. Tax Liens
If a property owner fails to pay taxes—whether income, property, or other types—the IRS or local municipality can file a lien. In serious cases, it may lead to foreclosure.

3. Judgment Liens
Resulting from a lawsuit, these liens are placed by creditors after winning a judgment against the property owner who failed to repay a debt.

4. HOA or Utility Liens
Homeowners’ associations or utility companies can file liens for unpaid dues or bills. These are often smaller but still must be resolved before a clean transfer.

5. Child Support Liens
In some jurisdictions, unpaid child support can trigger liens on real property owned by the delinquent parent.

Why Liens Matter for Investment Properties

For investors, liens represent potential deal killers—or opportunities, depending on how they’re handled.

Here’s how they can impact your deal:

• Legal Risk: Taking over a property without addressing liens may open you to lawsuits or financial obligations you didn’t expect.
• Cloud the Title: Liens must be resolved before a sale can close. Until then, the title is “clouded” or unclean, preventing you from taking full ownership.
• Affect Financing: Most lenders won’t issue a mortgage on a property with unresolved liens.
• Change Your Strategy: Some liens are inexpensive or negotiable. Others are so costly they wipe out any profit. In rare cases, resolving a lien gives you instant equity if you buy the property at a discount.

Should You Consider Properties With Liens?

The answer is: it depends. Every lien situation is different.

When it might be worth it:

• The seller is motivated and willing to discount the property
• The lien is small and easy to resolve
• You have the legal or financial resources to clear it quickly
• You’re confident in the post-lien value of the property

When it’s best to walk away:

• The lien amount is high and will severely cut into your margins
• The lien is part of ongoing litigation
• The seller isn’t transparent about the lien
• You don’t have the experience or legal support to navigate it

Pro Tip: If you’re new to real estate investing, always consult a real estate attorney before purchasing a property with a lien. Don’t assume you can “figure it out later.”

How to Check for Liens on a Property

Fortunately, checking for liens isn’t difficult—you just need to know where to look.

1. Work With a Title Company
This is the most reliable and efficient way to identify liens. Title companies run comprehensive checks and produce a title report that includes:

• Active liens
• Previous owners
• Easements or encumbrances

You’ll usually work with a title company during escrow, but you can ask for a preliminary check even before making an offer.

2. Search County Clerk or Recorder’s Office
Most counties have public databases where you can search:

• Property address
• Parcel number
• Owner’s name

These searches may show tax liens, contractor liens, and court judgments attached to the property.

3. Use the Tax Assessor’s Website
Delinquent property taxes will often appear on the local tax assessor’s website. Some counties even list lien amounts and the dates filed.

4. Hire a Real Estate Attorney or Title Search Professional
In complex cases, a real estate attorney can help uncover hidden or expired liens, negotiate payoffs, and give legal advice.

5. Ask Your Real Estate Agent
Experienced investor-friendly agents often have relationships with title professionals and can help you order a title report early in the process.

Can You Remove a Lien From a Property?

Yes, but it must be done properly. Common methods include:

• Paying the debt in full (e.g., taxes, unpaid contractors)
• Negotiating a payoff amount with the lienholder
• Contesting the lien in court (if it’s fraudulent or expired)
• Waiting for the lien to expire (depends on jurisdiction)

Once satisfied, a Lien Release or Satisfaction of Judgment must be recorded with the county. Always confirm the lien is officially removed from the property records.

A Lien Doesn’t Always Mean “No Deal”

For savvy investors, properties with liens can offer unique advantages:

• Lower purchase prices
• Less competition
• More negotiating power

But they also require more research, legal guidance, and patience. If you’re new to investing, focus on clean-title deals first and move into liened properties as your confidence grows.

Find Clean, High-ROI Properties With Privy

Navigating the legal risks of property liens is part of becoming a smarter investor. But finding the right properties—with clean title, strong potential, and favorable market conditions—can still take time and effort.

That’s where Privy comes in.

Privy is a real estate investment platform that uses real-time MLS data, investor activity tracking, and automated analysis to help you:

• Identify the best investment properties in your target market
• Access comps, rental data, and investor-backed insights
• Avoid red-flag properties with hidden risks
• Work with agents and title pros to complete thorough due diligence