Someone’s home could very easily be the single largest asset. Homeowners often want to sell their properties when the market can offer them the greatest return on their investments, but certain factors can diminish what they earn from a sale or even result in a transaction falling through entirely.
For example, title issues can prove to be insurmountable challenges for those conducting real estate transactions. Issues with the title records for a property may prevent a title insurance company from underwriting a policy and may lead to major delays in the closing process or the cancellation of the sale in some cases. Mechanics liens are among the blemishes that may turn up during a title search and impact a closing in Florida.
What is a mechanics lien?
Mechanics liens or construction liens are title records reflecting unpaid balances due to contractors, construction companies or material providers. When a property owner signs a contract to have work done on a property or new construction put up, they will often pay a deposit when they sign the contract or when work starts and then cover the remaining balance upon completion of the project.
Withholding the final payment is a source of leverage that can help property owners hold contractors to certain standards. However, if they do not make good on their obligation to pay the remaining balance, they may end up facing claims brought by contractors or material providers. Proof of an unpaid invoice can be justification for businesses and contractors to request a mechanics lien against the property. That lien will prevent the owner from transferring title to someone else or refinancing the property without first paying the balance in full. In some cases, a mechanics lien could even result in the foreclosure or forced sale of the property.
How do owners resolve mechanics liens?
The obvious solution for a mechanics lien is to pay a service provider in full for the work that they did. Even then, sometimes the lien holder will not take the necessary steps to remove the lien after they receive payment in full. It could be multiple years after a homeowner paid off a balance due when they discover the mechanics lien still affecting their property. Quiet title actions initiated in civil court can be an effective means of eliminating a lien from someone’s title records so that they can move forward with a residential real estate transaction.
Identifying possible complications that could affect a real estate closing may help property owners streamline the process of listing and selling their homes effectively and without compromising their interests.