Question 1

How do voluntary liens work on real property?

Accepted Answer

Real property voluntary liens: the owner pledges their property as security for a debt. The lien: is created by a written instrument (mortgage or deed of trust), recorded in the official records (providing constructive notice and establishing priority), and enforceable through foreclosure (if the borrower defaults). FL: is a judicial foreclosure state (the lender must file a lawsuit and obtain a court judgment before the property can be sold). The lien: encumbers the property (it transfers with the property if sold; the buyer takes subject to the lien unless it is paid off at closing). Multiple voluntary liens: can exist on the same property (first mortgage, second mortgage, HELOC: each has priority based on its recording date).

Question 2

What happens to voluntary liens when Florida property is sold?

Accepted Answer

Sale: at closing, voluntary liens are typically satisfied (paid off from the sale proceeds). The closing agent: obtains payoff statements from all lienholders, deducts the payoff amounts from the seller’s proceeds, pays the lienholders, and records satisfactions of the liens. If the proceeds are insufficient: the seller must bring funds to closing or negotiate with the lienholder (short sale: the lienholder agrees to accept less than the full amount owed). After closing: the property is conveyed to the buyer free and clear of the voluntary liens. Title insurance: the title company verifies that all voluntary liens have been satisfied before issuing the policy.

Question 3

Can a voluntary lien be removed without paying it off in Florida?

Accepted Answer

Removal without payoff: generally no (the lien secures a valid debt and the lienholder has the right to payment). Exceptions: negotiation (the lienholder agrees to: release the lien for less than the full amount: common in short sales and workout situations), subordination (the lienholder agrees to: change the priority of the lien: moving it behind another lien), partial release (the lienholder releases the lien on a portion of the property: common in subdivision development), and bankruptcy (the bankruptcy court may: strip off a wholly unsecured junior lien: if the property’s value is less than the balance of the senior liens; Chapter 7 or Chapter 13). The owner: should consult a FL attorney before attempting to remove a voluntary lien.

Voluntary Lien: Real Property

Voluntary Liens on Real Property

How It Works

At Sale

Removal Without Payoff

Related Terms

Barnes Walker Real Estate

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