17.4 Liens on Real Property: Types, Priority & Release

Section 17.3 introduced liens alongside mortgage financing and foreclosure. This section treats Liens as the blueprint does — a subject of its own — because clearing them is the work. A title commitment arrives with six exceptions; the closing does not happen until each one is paid, released, subordinated, insured over, or shown to be someone else's problem.

The classification grid

Two cuts describe every lien on the exam:

A lien secures payment; it does not transfer ownership. The lienholder's remedy is to foreclose and be paid from the proceeds according to priority.

Mechanic's and construction liens

This is the lien paralegals encounter most and the one with the most traps.

Who may claim. General contractors, subcontractors, laborers, and — in most states — material suppliers. Many states also cover architects, engineers, and surveyors. Some states require the claimant to be licensed, and an unlicensed contractor may lose lien rights entirely.

The notice sequence varies by state but generally has three or four steps:

1. A preliminary notice (variously called a pre-lien notice, notice to owner, or notice of furnishing), often required from parties who did not contract directly with the owner, within a short window after first furnishing labor or materials.
2. Recording the lien claim within a statutory period after last furnishing or after completion.
3. A notice of intent to foreclose in some states.
4. Filing suit to enforce within a separate, usually short, period. Missing this one extinguishes the lien even though it is recorded.

Deadlines are short and local. Never state a number of days from memory — pull the statute and calendar it the day the file opens.

Relation back is the priority trap. In many states the lien's priority dates not from recording but from the visible commencement of work on the site, or from the claimant's first furnishing. A lender who records a construction mortgage after the excavation started can find its mortgage junior to liens recorded months later. This is why lenders order a pre-construction inspection and require lien waivers at each draw.

Lien waivers come in four combinations: conditional (effective only when payment clears) or unconditional, and partial/progress or final. Signing an unconditional waiver before the check clears is how a subcontractor loses its rights.

Owner protections include a recorded notice of completion (which shortens the filing window in many states), a payment bond, and, in residential settings, statutory limits on liability where the owner already paid the general contractor.

Public projects. Government property generally cannot be liened. On federal construction, the Miller Act (40 U.S.C. §§ 3131–3134) requires payment bonds, and unpaid subcontractors and suppliers sue on the bond. States have "Little Miller Acts" doing the same for state and local work. If the stem puts a courthouse or a school on the site, the answer is a bond claim, not a lien.

Judgment liens

A money judgment does not attach to land by itself. It becomes a lien when it is docketed, abstracted, or recorded as the statute requires — in the county where the land sits, or statewide in states with a central docket. Once attached, it burdens the debtor's real property in that jurisdiction, including after-acquired property in many states.

Judgment liens have a statutory duration and usually can be renewed before expiration. Enforcement is by execution, levy, and a sheriff's sale, subject to homestead and other exemptions. A writ of attachment is the pre-judgment cousin, available only where the statute allows and usually requiring a bond.

Watch the name-matching problem: a judgment against "Robert A. Klein" may or may not attach to property held by "Bob Klein." Identity affidavits resolve routine mismatches; genuine ambiguity goes to the attorney.

Tax liens

Ad valorem property taxes and many special assessments are specific liens on the parcel and are typically superior to nearly every private lien regardless of recording order. That is why every payoff worksheet starts with taxes. Unpaid taxes lead to a tax sale or tax-certificate sale, followed by a statutory redemption period during which the owner or a lienholder may pay and reclaim.

Federal tax liens run on a separate system:

• The lien arises under IRC § 6321 when the IRS assesses, gives notice and demand, and the taxpayer fails to pay. Under § 6322 it relates back to the assessment date.
• It is a general lien on all property and rights to property of the taxpayer.
• But under § 6323(a) it is not valid against a purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until a Notice of Federal Tax Lien (NFTL) is filed in the proper office. § 6323(b) carves out further superpriorities for certain buyers and lenders.
• Collection is generally limited to 10 years from assessment under § 6502.
• Relief mechanisms: discharge of specific property, subordination, withdrawal of the notice, and release once satisfied or unenforceable.

Association and other liens

HOA and condominium assessment liens arise under the declaration and the state statute. In states adopting the Uniform Common Interest Ownership Act or a similar scheme, a limited number of months of assessments — commonly six — takes priority over a prior recorded first mortgage, the so-called super-lien. Do not assume the association lien is junior everywhere; check the statute.

Other recurring items:

• Vendor's lien — the unpaid seller's equitable lien for purchase price.
• Equitable lien — imposed by a court to prevent unjust enrichment.
• Child support liens — statutory, and in many states arising automatically on arrears.
• Lis pendens — a recorded notice that litigation affecting title is pending. It is not a lien. It gives constructive notice so that anyone acquiring an interest takes subject to the outcome. Treating a lis pendens as a lien that can be "paid off" is a classic wrong answer.

Priority

The baseline is first in time, first in right, filtered through the state's recording act (race, notice, or race-notice) as covered in Section 17.1. Then come the exceptions:

• Property tax liens jump ahead.
• Mechanic's liens may relate back ahead of a recorded mortgage.
• A purchase-money mortgage typically takes priority over pre-existing judgment liens against the buyer, because the buyer never held the property unencumbered.
• A subordination agreement lets a senior lienholder voluntarily step behind a junior one — routine when a first mortgage is refinanced and a home-equity line must stay in second position.
• Future advances under an open-end mortgage may or may not retain the original priority depending on whether the advance was obligatory or optional and on state law.
• The HOA super-lien, where enacted.

Foreclosure of a senior lien generally extinguishes junior liens as to the property (junior holders may claim surplus proceeds); foreclosure of a junior lien leaves senior liens on the title, and the buyer takes subject to them.

Release, satisfaction, and clearing the record

Paying the debt does not clear the record. Someone must record a release, satisfaction of mortgage, reconveyance (in deed-of-trust states), or lien waiver and release. A partial release frees one parcel from a blanket lien.

Many states impose a statutory deadline on a lender to record a satisfaction after payoff, with penalties for failing to do so. When a lienholder is defunct, merged, or unreachable, the fix may be a lost-instrument affidavit, an affidavit of satisfaction under statute, or a quiet title action.

A lien recorded without a legal basis exposes the filer to slander of title damages and, in states with wrongful-lien statutes, to statutory penalties and attorney fees.

The paralegal's role

Run the lien search across the judgment, tax, UCC fixture, and lis pendens indices in every name variation. Order payoff letters with a per-diem figure and a good-through date, and re-verify if closing slips past that date. Build the payoff worksheet in priority order. Calendar every mechanic's-lien deadline on a construction file. After closing, confirm that each release was actually recorded and pull the recorded instrument for the file — an unreleased paid mortgage becomes the next owner's title exception. You assemble, calculate, and calendar. Whether an exception is acceptable is the attorney's call, and telling a client the title is clear is a legal conclusion and unauthorized practice.

Worked path

A commitment on a small commercial building shows four exceptions: an unreleased 2018 mortgage, a docketed judgment against a prior owner, delinquent 2025 property taxes, and a mechanic's lien recorded three months ago by a roofing subcontractor. The paralegal orders payoffs on the mortgage and taxes, noting the tax lien is senior to everything and must be paid at closing. She checks whether the judgment debtor's name matches the seller or a predecessor whose interest was already cut off. On the roofing lien she pulls the statute, finds the enforcement suit deadline, and flags for the attorney that the lien may relate back to visible commencement — which predates the lender's mortgage. She recommends nothing; she hands the attorney a dated exception list with the statute cited and the deadline calendared.