Guide to Real Estate Liens

Guide to Real Estate Liens in Oklahoma

Liens and other claims against real estate can cause complications for owners, delay closings, and result in lost proceeds in transactions. Here is a helpful breakdown of the various types of liens that can affect real estate in Oklahoma.

What is a lien?

A lien is a legal claim or encumbrance on a property that is allowed by private contract or by law. In real estate, liens “attach” to the chain of records related to a specific parcel of land. There are several types of liens that can all affect the title to real estate in different ways; understanding the differences between the types can help property owners, buyers, and other stakeholders make informed decisions.

Types of liens created by contract:

Mortgage Liens. A mortgage lien is placed on real property by a lender to secure payment of a mortgage loan. When a property owner obtains a mortgage loan, the lender places a lien on the property to secure the loan. The lien remains in effect until the loan is paid off, at which point the lien is released. Mortgage liens can affect real estate ownership by limiting the owner’s ability to sell or refinance the property. If the property owner wants to sell or refinance the property, the mortgage lien must be satisfied first.
Homeowners Association (HOA) Liens. If a property is part of a homeowners association, the HOA can place a lien on the property for unpaid annual dues, fees, assessments, or other charges. HOA liens are designed to ensure that all homeowners contribute to the upkeep and maintenance of common areas and amenities within the community. In Oklahoma, HOA liens can be particularly significant because HOAs typically have the power to foreclose on a property if the lien remains unpaid. Property owners should be aware of their HOA obligations and promptly pay all fees and assessments to avoid the risk of an HOA lien being placed on their property.

Types of liens created by law:

Judgment Liens. A court judgment that involves a money amount, or orders one party to pay another party, can be recorded in the county clerk’s land records and be enforced against the property as a way to secure payment of the judgment amount. In Oklahoma, judgment liens are valid for five years from the date of recording unless renewed for longer. A properly recorded judgment lien becomes a cloud on the title of the property until paid, meaning the owner cannot sell or refinance their property without first satisfying the lien.
Mechanics and Materialmens Liens. These liens are placed on property by contractors, subcontractors, suppliers, or laborers who have not been paid for work performed on a property. For personal property, or types of property that are not real estate, this can result in a mechanic’s lien. These liens allow the creditor to seek payment by forcing a sale of the property that is the subject of the lien. In Oklahoma, mechanics and materialmens liens must be filed within four months of the last day of work on the property; the lien must be filed with the county clerk’s office where the property is located, and a copy must also be sent to the property owner. The lien remains valid for one year after it is filed and can be extended for an additional year. It is important for property owners to ensure that all contractors, subcontractors, and suppliers working on their property are paid in full to avoid the potential of a mechanics and materialmens lien being placed on their property. It is also important for contractors, subcontractors, and suppliers to file their liens in a timely manner to protect their right to payment through the lien foreclosure process; even if the lien timing has passed, the party who wants to place a lien on the property may still be able to collect the unpaid sum by going to court to enforce their agreement with the property owner.
Property Tax Liens. In Oklahoma, property taxes are the primary source of revenue for local governments and they fund essential services such as schools, public safety, and infrastructure projects. The county assessor’s office assesses the value of each property and the county treasurer calculates the property taxes based on the assessment and the applicable tax rate. When property taxes are unpaid, the county treasurer can auction off the parcel of real estate through a process known as the “tax resale” or “tax sale” that occurs every June. For more, see our article on the annual tax sale and quiet title process in Oklahoma.
Income Tax Liens. An income tax lien is a lien placed on real property by a government agency, such as the Internal Revenue Service (IRS) or the Oklahoma Tax Commission (OTC), to secure payment of unpaid income/earnings taxes. In Oklahoma, tax liens remain in effect for ten years from the date they are filed, and they can be renewed for an additional ten years. Like above, the lien allows the government agency to seek payment by forcing a sale of the property to which the lien has attached.
Hospital Bill Liens. In certain circumstances, hospitals and medical providers, such as the Oklahoma Health Care Authority, may file liens against real estate owned by patients who have not paid their medical bills.
Municipal Liens. Municipalities, or the city government, can place liens on real estate within their jurisdiction for various reasons, such as unpaid utility bills, code violations, or outstanding fines and fees. Many tax resale properties have municipal liens in Oklahoma by the time of the eventual auction; this is because unattended properties frequently require the city to go to the property to mow grass and vegetation, or send police or fire services to the abandoned lots and structures.

What is the effect of a lien filed on real estate in Oklahoma?

A valid lien which is recorded with the county clerk, who is the office responsible for hosting land records in Oklahoma, must typically be satisfied or properly resolved before a real estate parcel can be sold to a new owner. This means a proper lien can delay closing or impact how much money the seller receives once closing is completed.

Other helpful information about real estate liens in Oklahoma:

We are here to help.

Our firm helps clients navigate all stages of lien issues affecting property in Oklahoma. Contact Avenue Legal Group to ask questions or begin resolving your lien claim or dispute.

Have Questions?