A property lien is a legal claim a creditor has against a property for an unpaid debt. This claim provides the creditor with a security interest in the property, meaning if the debt is not paid, the creditor can take action against the property to recover the money owed.
What is a Property Lien in Alabama?
In Alabama, a property lien is a formal claim against real estate used to secure the repayment of a debt. When a lien is attached to a property, it gives the creditor, or lienholder, a legal interest in that property until the financial obligation is satisfied.
Liens fall into two categories: voluntary and involuntary. A voluntary lien is one the property owner agrees to, with a mortgage being the most common example. An involuntary lien is placed on the property without the owner’s consent, often from a legal judgment, unpaid taxes, or failure to pay for construction work. Both types of liens cloud the property’s title and must be handled to ensure clear ownership.
Common Types of Liens on Alabama Property
Several types of liens can be placed on property in Alabama, each arising from different circumstances.
- Judgment liens that stem from a lawsuit. If a creditor wins a monetary judgment in court and the debtor does not pay, the creditor can record that judgment, creating a lien against the debtor’s real estate.1Justia. Alabama Code § 6-9-211 – Judgment Constitutes Lien on Property of Defendant
- Mechanic’s liens, also called materialman’s liens, which are available to contractors, subcontractors, and suppliers who provide labor or materials to improve a property but are not paid.2Justia. Alabama Code § 35-11-210 – Lien Declared
- Tax liens imposed by government entities for unpaid taxes. The Alabama Department of Revenue can place a lien for unpaid state income taxes, while counties can do the same for delinquent property taxes.3Justia. Alabama Code § 40-1-2 – Lien for Taxes – Generally
- Mortgage liens that are created consensually when a person borrows money to buy a home.
- Homeowners’ association (HOA) or condominium liens that can be placed for unpaid dues and assessments.4Justia. Alabama Code § 35-8A-316 – Lien for Assessments
How Liens are Legally Established on Property in Alabama
For a lien to be legally effective in Alabama, it must be recorded in the public records of the county where the property is located. This process is known as perfecting the lien and puts the public on notice of the creditor’s claim. For a judgment lien, the creditor must file a certificate of the judgment with the office of the judge of probate.5Justia. Alabama Code § 6-9-210 – Certificate of Clerk or Register to Be Filed With Probate Judge
The process for a mechanic’s lien is time-sensitive. The contractor or supplier must file a verified statement of lien in the probate court where the work was done. Original contractors have six months after the last day of work to file, while subcontractors and material suppliers have four months.6Justia. Alabama Code § 35-11-215 – Verified Statement – Time for Filing Government bodies also file notices of tax liens in the county probate office, and mortgage liens are recorded at the time of the property closing.
Effects of a Lien on Your Property Ownership
A lien on your property primarily affects your ability to sell or refinance it. Because a lien creates a cloud on the title, most buyers and lenders will require that it be paid and removed before a transaction can proceed. This ensures the new owner or lender has a clear interest in the property.
A lien can also expose the property to foreclosure, where a lienholder files a lawsuit to force a sale to satisfy the debt. The order in which liens are paid from sale proceeds is determined by priority, which is established by the recording date.7Justia. Alabama Code § 35-11-211 – Priority of Lien Older liens typically have priority over newer ones. The presence of a lien may also be reported to credit bureaus, potentially impacting your credit score.
Options for Dealing With a Lien on Your Alabama Property
When faced with a lien on your property, there are several ways to address it.
- Pay the underlying debt in full. This involves contacting the lienholder to get a final payoff amount. Once the debt is paid, it is important to ensure the creditor files a “Satisfaction of Lien” or “Release of Lien” with the probate court to officially clear the title.8Justia. Alabama Code § 35-10-30 – Penalty
- Negotiate a settlement with the creditor. Sometimes, a lienholder may agree to accept a lower amount to resolve the debt quickly and avoid the costs of litigation.
- Take legal action to remove the lien. If you believe the lien is invalid due to an error, improper filing, or because the debt was already paid, you can challenge it in court. This path often requires assistance from an attorney.
- Wait for the lien to expire. A judgment lien in Alabama is generally effective for ten years from the date of the judgment. However, a creditor may be able to extend this period by reviving the judgment. Relying on expiration is a risky strategy that should be considered with legal counsel.
- File for bankruptcy. In certain situations, filing for bankruptcy may eliminate some debts and associated liens, but this is a complex legal area requiring professional advice.