There are several types of liens that can be attached to a person’s property. Each has a different expiration date, and if successfully enforced, could result in the sale of your property to obtain the amount of the lien from the proceeds (with any remaining funds going to the property holder). While this list is not exhaustive, the most common types of liens are:
A state tax lien occurs when taxes are due to the state, or to counties of the state, or other special tax districts of the state. State tax liens don’t expire, and the only way to get rid of them is to pay the amount owed-otherwise, when you sell your home, the state will collect the amount owed from the proceeds of the sale.
A federal tax lien is one that the federal government can use when you fail to pay a tax debt. A federal tax lien exists after the IRS puts your balance due on the books (assesses your liability), then sends you a bill that explains how much you owe (Notice and Demand for Payment) after you fail to fully pay the debt in time. The lien continues until it is paid, or it expires. Generally, the IRS has ten years to collect after it is assessed. The IRS can extend the ten years under two different circumstances. First, the statute of limitations can be extended if you enter into an installment agreement; this extends the expiration date to 89 days after the installment agreement expires. The second is a release of levy with an agreement to extend the statute of limitations to a specific date, provided the extension date hasn’t passed. A release of levy may be given if the lien is creating an immediate economic hardship. This doesn’t mean you are excused from paying what is owed, only that you will be given some leeway to make the payments. The IRS will generally work with you to establish a payment plan or other steps to help you pay off the balance.
A judgment lien is created when a judgment is obtained in superior, magistrate, or other state courts. This lien can become unenforceable after seven years, if the lien holder doesn’t seek to enforce the lien by providing public written notice of its efforts, and by including the names of the parties to the enforcement action, the nature of the action, and having it recorded in the court. The lien holder is able to re-record the judgment every seven years to keep it enforceable; however, if the lien holder fails to re-record the lien within the seven year period, he or she has only three years after that expiration date to re-record it. If the lien holder fails to re-record during the three years, he or she is barred from enforcing the judgment.
A laborer’s lien is a lien filed by a person who provides services under a contract for manual labor or physical work. The lien can only be for the work performed, and cannot include any materials provided (but these would fall under a materialman’s lien, described below). The lienholder must go to court to obtain a judgment against you within twelve months, or the lien becomes unenforceable.
Mechanic’s or materialman’s lien
A mechanic’s or materialman’s lien is a type of lien that contractors, subcontractors, and others who have contributed services and/or materials to improve a new or existing home can file against a homeowner’s property if they do not get paid, even if the homeowner paid the general contractor. Liens like this don’t go on your credit report, and expire within 12 months unless the subcontractor or contractor actually files a lawsuit to collect the money.