What is a Lien in California?
In California, a lien is a security interest placed on a property to secure the refund of a debt or performance of an obligation. It asserts a claim or legal right against collateral assets to satisfy a debt or obligation. A lien guarantees an underlying commitment, such as the payment of a loan or tax debt. Any asset that is the subject of a lien can be seized if the obligation is not satisfied. Typically, a property lien will allow the creditor to hold a debtor's property until debts are discharged. California courts facilitate the judgment collection process by issuing orders to creditors to enforce their liens.
Are Liens Public in California?
Yes, per California state constitution, Liens are public record and can be made available to interested and eligible members of the public on request. The state statutes provide that a lien becomes public record when it is attached to any real property (current or future) owned by an individual. Liens typically remain effective for at least 10 years, and they remain so until they are removed by the property owner or debtor. They are held by the county recorder in the judicial district where the property is situated, and their records made available to the public on request. Liens can also be uncovered through a property title search.
Types of Liens in California
There are various types of liens in California, as debt can stem from any area of a person's life: a contract, purchase, loan, or lawsuit. As a result, lenders can place different kinds of liens on a person's property, automobile, settlement award, child support, and more to guarantee the repayment of a debt or performance of a financial obligation. These liens include a judgment lien, property lien, tax liens, mortgage lien, UCC (Uniform Commercial Code) lien, and mechanics lien. Regardless, all liens can be categorized as either voluntary or involuntary (otherwise known as voluntary or consensual lien) and general or specific.
A voluntary lien is established via an agreement between a lender and borrower. A mortgage lien is a prime example of a voluntary lien. On the other hand, an involuntary lien originates from the operation of law. Hence, it is often called a statutory lien. An example is a property tax lien. Unlike a voluntary lien, involuntary liens does not require the property owner's consent to be attached.
Another characteristic of liens is that they can be general or specific. In California, a general lien attaches to all of a debtor's real or personal property. It allows a lender (now the lienor or lienholder) to take any property to pay off a debt. Meanwhile, a specific lien attaches only to a particular property. It allows the lienholder to seize or sell the collateral property if the borrower (now the lienee) fails to fulfill a financial obligation.
Here's an example: the result of failing to pay taxes in California is that the Internal Revenue Service, a state agency (e.g., the California Franchise Tax Board, Board of Equalization, Employment Development Department), or another agency with appropriate authority can record a lien against the individual's real or personal property. This lien is both general and involuntary as it does not require the delinquent taxpayer's consent, and it affects all of their real or personal property. With the lien, the filing tax agency can auction any property the taxpayer owns to pay off the outstanding debt.
How Do I Check for Liens in California?
Liens are public records in California. Therefore, anyone who wants to check for liens recorded in the state can contact or visit the relevant government office.
For real estate liens, a resident can go to the county clerk/recorder's office in the county where the property is situated to request a title deed search. The party can examine the actual record or obtain copies at the office.
Most county recorders also provide a general index on their websites to aid the public in verifying liens remotely. Furthermore, a researcher may find an online order or records request form on a county recorder's site. Usually, this form can be faxed or mailed to obtain copies.
In contrast, people interested in finding liens against personal property in California must check with the Secretary of State's office. The SOS also provides a search tool online to view UCC, judgment, and state tax lien records and download document images.
Interested persons may also opt to employ the services of a title company for this function. While they primarily work to insure titles, a property title search process reveals liens and/or any kind of loan on the company.
Free Lien Search in California
In California, government agencies that maintain land ownership records and business filings provide free lien searches to the public. An individual can search at the relevant agency's physical location or check if the agency offers a search tool on its website. The information retrieved from such websites may include:
- Lienee's name and address
- Lienholder's name and address
- Type of lien
- Document or file number
- Recording/filing date
- Status of the lien (active, released, or expired)
- The lien's lapse or expiry date
- Document images (e.g., lien notices, abstracts of judgments, the release of lien)
Note that what is available online is not the complete or official record. It may be necessary to visit the agency's office to review the full report for free.
What is a Property Lien in California?
A property lien is a lawful claim on a debtor's assets that allows the holder of the claim to repossess assets if the debts owed are not paid. It is an involuntary lien wherein a property owner's rights are rescinded upon a failure to fulfill contractual obligations. A property lien can be granted for the repossession of properties, including cars, boats, and houses. A property lien must be recorded and approved by the local county recorder where the property is located before being delivered to the property holder. The lien will contain the specific terms of the action that have been taken to repossess a property.
How Do You Know if a Property Has a Lien in California?
When a voluntary lien is created, the property owner will be aware of the lien because it was fashioned by their own action. However, uncovering an involuntary lien in California may be somewhat tricky. One reason is that separate agencies are responsible for receiving lien filings in the state. Hence, individuals who choose to find this information themselves must query the appropriate office. Even so, the released property records may not list all liens recorded against the property of interest, as the information will be specific to liens filed in that office or county.
If the party interested in discovering the property lien is also the lienee, such a person should have already received notice before the lien was filed. Then again, the lienee may only discover the encumbrance later on - when trying to sell, transfer, or refinance a property. The latter can happen if the party changes addresses or receives mail at another address.
In any case, the most efficient way to know if someone's real property (building, home, land) has been liened in California is to run a title deed search through a county recorder's office. This search reveals who legally owns the real estate and if any liens or claims exist on that property. Nevertheless, real estate buyers are still encouraged to hire a real estate attorney or title company to conduct a thorough search - and get title insurance to protect against losses from unknown liens.
For liens attached to personal property (vehicles, mobile homes, valuable art), it is best to contact the Secretary of State.
Property Lien Search by Address in California
Generally, the California government agencies that record liens on property (the county recorder's offices and the Secretary of State) do not provide an option to perform a property lien search by address in California. However, with address information, individuals can obtain information regarding the owner of the property and then proceed to conduct an address-based lien search using the available options
Any person who performs a property lien search in California through these offices to check liens on property requires the following search keywords:
- A property owner's last name (a partial first name or middle initial may be needed to filter the search)
- The property's legal description
- The recording date
- Instrument/document number
- Book/page number
Individuals who insist on a property lien search by address in California may use third-party options to find liens on a property.
Free Property Lien Search by Address
As mentioned previously, residents cannot perform a property lien search by address at the recorder's offices in California. Nonetheless, an individual bearing a property owner's name or document number can conduct a free property lien search in California via these offices.
Altogether, the county recorder's offices have two main methods by which interested persons may check for liens on property at no cost: in person and online. County recorders' offices allow inspections of property records at their physical addresses. One can determine if the clerk offers a walk-in service or requires an appointment by calling the office or reviewing the relevant page on the office's website. However, only certain recorders provide an online property records index to find liens on a property or other property information. An example is the Sonoma County Recorder's Office.
What is a Tax Lien in California?
A tax lien is a non-consensual or statutory lien that the California Department of Tax and Fee Administration (CDTFA) can place on an individual or company's real property for unpaid taxes. If a taxpayer owes taxes and shows no sign of paying the debts, the agency can place a legal claim against the taxpayer's property. The lien on the property would be in the amount of unpaid taxes. Tax liens can be applied to all taxes, including income, business, and property taxes. This is typically employed as a last resort when other forms of debt collection have failed. Once placed, a tax lien can only be released if the tax debt is paid in full or the taxpayer reaches a settlement with the CDTFA.
Tax Lien Lookup in California
Government agencies that collect taxes file tax liens with local and state jurisdictions to secure tax debts. Thus, individuals interested in looking up tax liens filed against a property in California should search property or land records maintained by local and state agencies.
To find liens perfected against real property based in California (for instance, liens attached due to unpaid property taxes), one can visit the county recorder's office to search land records or access the office's online property index (if provided). This office should be situated where the real estate lies.
Meanwhile, to find tax liens attached to personal property (e.g., business equipment), individuals can contact the California Secretary of State (SOS) or access the agency's online lien search tool.
What is a Mortgage Lien in California?
A mortgage lien is a legal claim held by creditors to repossess a property if a debtor cannot pay back the money owed. The property owner takes out a loan, and the creditor retains an interest in the owner's real property. This grants the creditor the right to foreclose the property if the debtor defaults.
What is a Mechanics Lien in California?
A mechanics' lien guarantees payments to contractors and firms that build and repair structures. A mechanics' lien can be filed against a property to secure payment of a claim made by anyone who supplied material or labor to develop a property. It is a legal tool that provides construction firms and laborers with a security interest in the property on which they worked. A mechanics' lien also guarantees first payments are made to contractors, subcontractors, and suppliers in the event of a liquidation. Anyone providing labor or materials for development can file a mechanics' lien. The lien will cover the reasonable value of the work provided or its contract price, whichever is less. There are precise conditions to be met to enforce a mechanics' lien in California.
Before filing a mechanics' lien, the claimant must give the owner and general contractor a preliminary notice. If the owner receives a loan to finance the development, the project's lender must also be served. If the claimant is in direct contact with the owner, only the lender needs to be served. The preliminary notice serves to inform owners of construction on their properties and is not required if an owner has direct knowledge of the construction.
The lien must be filed within 90 days of completion of the construction work. However, it must be filed in 60 days for general contractors and 30 days for other claimants if the owner files a notice of completion. The lien must include:
- The owner's name
- A general property description
- The contractor's name
- The description of work done
- The amount owed
It must also include a written statement signed and verified by the claimant.
After filing the lien, the claim must be brought to suit within 90 days, or it expires. An expired lien cannot be enforced. Also, the property owner must file a "lis pendens" or notice of pending action with the county recorder where the property is situated. This is to put other purchasers and lenders on notice of the property's foreclosure. Owners who want to sell or finance their properties can remove the lien with a mechanics' lien release bond. This is a surety bond in favor of the lien claimant for 125% of the claim and must be liquid cash. It serves as a substitute for the property in the lien.
What is a UCC Lien?
A UCC lien is a claim against a company's assets under the Uniform Commercial Code (UCC). The Uniform Commercial Code (UCC) depicts business laws implemented by each state, including California. Each state's laws do not vary much to facilitate interstate commerce. The UCC covers all commercial transactions, including the sales of goods, securities, and negotiable instruments. It does not cover employee, service, or real estate contracts, as these are under individual state jurisdiction.
A UCC-1 financing statement is a legal form filed by creditors to declare their rights to liens on secured loans given to small businesses. It allows the creditor to announce a lien on the loan, enabling them to seize, foreclose, or sell the collateral if it is not repaid. UCC-1 filings appear in business credit reports, which can affect additional borrowing as creditors will be more reluctant to deal with companies with UCC liens.
A UCC-1 filing can be against specific (defined) collateral, or they can be blanket liens. Blanket liens hold all of the debtors' assets as security. A UCC-1 filing has a five-year term and must be renewed by the creditor if the loan is still active after that period. Debtors are advised to ensure that the creditor files a UCC-3 financial statement for termination if the lien is paid off before the five-year limit to remove the collateral's UCC lien. It is also essential to confirm that it is done.
UCC-1 statement filings are made to the California Secretary of State, putting them on a public record. The information on a UCC-1 filing will include:
- The creditor's name and address
- The debtor's name and address
- The collateral property's description
Fees for UCC-1 and other filings in California can be found on the UCC Fee Schedule.
How to Conduct a UCC Lien Search in California
Individuals can conduct a UCC lien search in California on the Secretary of State's website. The California SOS has a UCC Search portal that can be accessed with a name or file number to find UCC filings. Other advanced search options like the file date, lien status (active or lapsed), and lapse date are also provided to users.
Note: If the UCC filing affected real property, an individual could conduct the UCC lien search at the county level - in the recorder's office where the property is located.
What is a Judgment Lien?
A judgment lien is an involuntary or non-consensual lien attached to a debtor's property when a creditor sues and wins a money judgment. A judgment lien can be filed against an individual or a business. A court ruling affords the creditor the right to be paid from the profits of the sale of the debtor's property. This happens when the debtor fails to fulfill debt obligations.
In California, judgment liens can be attached to both real property and personal property. To attach a lien to real estate, the creditor needs to file the Abstract of Judgment with the county's county recorder where the debtor owns real estate. To secure a lien against personal property, the Notice of Judgment should be filed with the California Secretary of State. The judgment debtor must be served with a notice of debtor's examination to establish the collateral assets. A judgment lien attached to any property in California remains on the property for ten years, even if the property changes hands.
What is a Federal Tax Lien
A federal tax lien is an encumbrance placed on real estate (land & buildings), financial assets, and personal property by the government to guarantee the payment of outstanding federal taxes. Sanctioned under 26 U.S. Code § 6321, the Internal Revenue Service (IRS) affixes a federal tax lien on a taxpayer's property when the individual receives a Notice and Demand for Payment (a document that states how much is owed) and refuses or fails to pay the tax debt by the due date. This lien attaches to all property the taxpayer owns or may acquire in the future.
Per federal law, the IRS does not need to file a Notice of Federal Tax Lien (NFTL) in public records to attach a lien to property. The filing allows the IRS to establish the government's legal claim to a property to other creditors.
According to the IRS, the most suitable way to discharge a federal tax lien is to pay the tax debt completely. Nonetheless, 26 U.S. Code § 6322 provides for release if the taxpayer's liability for the assessed amount is no longer legally enforceable. More information about federal tax liens can be obtained from the IRS website or by examining the Internal Revenue Code (IRC).
What is a Lien Title?
A lien title refers to the legal claim a lienholder (the person who attaches a lien) has over a person's property. It signals that the property was used as collateral for a loan, and the title cannot be completely transferred until the loan is repaid.
Where and How to Do a Title Search in California
Another more formal name for a property search is a "title search". This search involves reviewing public records to acquire information about a property's ownership before its purchase, sale, or transfer. An individual can also perform a property title search in California to check for liens on property (for example, liens placed because of unpaid property taxes) and other property defects.
In California, property titles are public records stored in government offices. Hence, the starting point for title searches in California should be a public agency. If running a title search on real estate, it is the county recorder's office based where the real property lies. On the other hand, it is the Department of Motor Vehicles for car title searches.
One may also employ a title company or real estate attorney to search on their behalf, or they may use a reputable third-party aggregate website to perform the title search. A title company works to insure the title of the properties of their clients. Hence, they are especially invaluable when conducting a title search.
Voluntary Lien vs. Involuntary Lien in California
A voluntary or consensual lien describes the placement of a lien on a property wherein the property owner is a voluntary participant - the owner consented to have the lien placed on the property. Examples of voluntary liens are mortgages and car loans.
An involuntary or non-consensual lien claims a property or asset without the owner's consent or approval. Examples of involuntary liens are tax, judgment, and mechanics' liens.
How Creditors Collect Payment Through a Lien
Any creditor (an owed party) who records a lien against a piece of property has a legal hold or claim on that property. The effect is that the creditor can physically repossess the property, force its sale, or take other legal actions against the property owner to satisfy a debt.
How Do I Get a Lien Removed in California?
Liens are quite resilient. Once attached to someone's property, they endure until a debt is paid or the statute of limitations (the period within which a lien is legally enforceable) expires. As such, even a bankruptcy proceeding cannot usually discharge a perfected lien, nor can the transfer of property ownership.
There are two methods to remove a lien in California. The first is to pay the debt willingly, including any penalties, interest, and fees, so that the creditor can release the lien. (Some creditors may accept a lesser sum.) Opting to wait out the statute of limitations is not advisable because the creditor can easily re-file the lien. The other way to remove a lien is to challenge it in court and establish its invalidity. However, the court will only discharge the lien if the lienholder cannot prove the lien's legitimacy.
How Long Does a Lien Stay on Your Property in California?
The length of time that a lien stays on a debtor's property in California depends on the type of lien. A voluntary lien, such as a mortgage lien, will ordinarily stick to a piece of property until the debt is repaid or property foreclosed.
On the other hand, involuntary liens are established by statute. Hence, while a debt must be paid to remove such a lien, the lien is enforceable as long as its statute of limitations is valid. For example, a UCC lien or tax lien is effective for ten years from the recording date. A judgment lien has a limit of five years (if recorded against personal property) and ten years (if recorded against real estate). Meanwhile, state law gives the mechanics' lien holder only 90 days to enforce the lien. Nevertheless, involuntary or statutory liens can usually be extended.
How to Avoid a Lien in California
The best way to avoid a lien in California is to follow any repayment agreement made with a lender and steer clear of debts (whether those originating from one's action or a lawsuit). That way, no creditor or lender will have a reason to record a lien against a person's property.
