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Liens usually come to our attention when something goes wrong. A lien is a legal claim placed on your property due to an outstanding debt, and it can go unnoticed until a major transaction, such as buying (or refinancing) a house or a car. Lenders often place liens on property that remain until the debt is paid. Mortgages and car loans create voluntary liens because you agree to them. However, involuntary liens are added to your property when someone claims you owe them money—and anyone can place one. And hidden liens? Keep reading.
Involuntary Liens
Involuntary liens come in several forms. The most common type is a mechanic’s lien, which is used by contractors and mechanics to claim unpaid work. A contractor can simply file some paperwork, present an unpaid invoice, and have the court confirm the lien. In addition, involuntary liens can be placed on your property—including your car title—by local and state authorities, or the IRS, for unpaid taxes, or even by a judge during a legal proceeding.
Liens are typically recorded in public records (such as the title of a car or house), and it can be challenging to sell property with an involuntary lien attached. For example, most states won’t allow you to transfer a car title if there are unresolved liens (though this can happen in a private sale). Similarly, selling a house with outstanding liens generally requires that the lien be either paid off or dismissed by a court. However, sometimes liens go unnoticed and turn into hidden liens—which can lead to serious complications for you.
Hidden Liens
A hidden lien refers to a lien that doesn’t appear in standard title searches. This means you might take legal possession of a house, car, or other property and later discover a debt claim attached to it—leaving you suddenly responsible for someone else’s debt after the sale has been finalized and the title transferred.
There are generally two reasons a property might have a hidden lien: simple oversight or fraud.
Oversight. Liens must be formally recorded in some way. Municipal liens for unpaid taxes, assessments, or other property-related debts should be filed with the county clerk’s office. If they aren’t, the lien still exists but won’t show up in a title search. Similarly, any lien placed by a lender is supposed to be recorded on the property’s title—but if there’s a mistake in the process, the lien can remain hidden.
When you take out a loan using your car title as collateral or if a lien is placed on it due to a debt (like a mechanic’s lien or a court settlement lien), the title should be updated and stamped with the lien information (and later updated when the lien is cleared). This responsibility usually falls on the lender, and if they forget to update the title, the lien won’t appear in a standard title search. Sometimes the title may be stamped, but the lien isn’t properly recorded, which is why it’s important to always ask to see the physical title before purchasing a used vehicle.
Fraud. While rare, some dishonest individuals may attach fraudulent hidden liens on property. This could involve burying the lien in long, complicated legal documents or disguising it under a different name, then failing to record it properly with the authorities. Like any scam, there’s deliberate effort to keep the lien hidden, which allows these fraudulent liens to persist even after the property has been transferred.
Finding Hidden Liens
The good news is that hidden liens are usually discoverable if you take the initiative when buying a house, car, or any property with a title. If the lien was missed due to oversight, you can often uncover it by doing a more thorough search: Along with a standard title search, you can check municipal records for any lien listings. While you can hire companies to do this for you, these records are public, and you can also search them yourself at your local county clerk’s website or office.
For car titles, contact your local DMV to see if they offer a free lien search—some do, but not all. You can also perform a search using the vehicle identification number (VIN), which often includes lien information, even if the lien wasn’t recorded correctly at the clerk’s office.
