Judgments, Liens, and Clouds on Title: What Indiana & Ohio Buyers Must Know Before Closing
Missy Horner
President, Empire Title Services | 20+ Years Experience
Quick Answer: Liens and Title Issues
What is a lien? A legal claim against a property that must be paid off before clear title can be conveyed.
Common types: Mortgage liens, judgment liens, tax liens, mechanic's liens, HOA liens.
What happens at closing: Liens are paid from seller's proceeds. Unresolved liens mean no clean title for the buyer.
Protection: Owner's title insurance covers liens missed in the search that surface after closing.
During any given week at Empire Title Service, our team uncovers liens, judgments, and title clouds on properties across Indiana and Ohio. Most are resolved cleanly before closing. Some delay the deal. A rare few kill it. Understanding what these issues are - and how they're handled - protects you as a buyer and prepares you as a seller.
The Most Common Types of Liens
🏦 Mortgage Liens
The most common lien - created when you borrow money to buy the property. Must be paid off and formally released (discharged) at closing when the property is sold. Sometimes old mortgages from prior owners linger in the records because the release was never properly recorded.
How it's resolved: Paid from seller's proceeds at closing. Empire Title requests a payoff statement from the lender and ensures the release is recorded after payoff.
⚖️ Judgment Liens
When a creditor wins a court judgment against a property owner in Indiana or Ohio, they can record that judgment in the county where the debtor owns property. This creates a lien against all real estate the debtor owns in that county - including the property you're trying to buy.
How it's resolved: Must be paid, negotiated, or disputed before closing. In Indiana, judgment liens are recorded in the county where the property is located (IC 34-55-9-2).
📋 Property Tax Liens
Unpaid property taxes in Indiana and Ohio become a lien on the property superior to almost every other claim - including mortgages. Tax liens accrue penalties and interest. In Indiana, a property can be sold at a tax sale after two years of delinquency.
How it's resolved: Delinquent taxes must be paid before or at closing. Empire Title verifies current tax status and prorates taxes correctly on the closing disclosure.
🔧 Mechanic's Liens
Contractors, subcontractors, and material suppliers who weren't paid for work on a property can file a mechanic's lien in Indiana or Ohio. These liens can be filed up to 90 days (Indiana) or 75 days (Ohio) after the last date of work - meaning a lien might not appear in the records at the time of the title search.
How it's resolved: Sellers must provide lien waivers from all contractors. Owner's title insurance provides coverage for unrecorded mechanic's liens in most standard policies.
🏘️ HOA Liens
Homeowners associations in Indiana and Ohio can record liens for unpaid dues, special assessments, or fines. HOA liens can, in some cases, supersede the mortgage in priority. Empire Title requests HOA payoff letters and verifies outstanding balances before closing.
How it's resolved: Unpaid HOA balances are paid from seller's proceeds at closing. The title company collects a payoff letter directly from the HOA.
What Is a "Cloud on Title"?
A cloud on title is any claim, document, or irregularity in the public record that calls the property's ownership or status into question. Unlike a lien (which is a financial claim), a cloud can be a non-monetary issue. Common examples include:
A 30-year-old mortgage from a prior owner that was paid off but never formally released from the records.
A deed in the chain of title that was signed by someone without authority - common in estate situations where heirs act without proper court approval.
A prior owner died, the property passed through the estate, but not all heirs signed off. A missing heir's claim can cloud the title years later.
A deed that describes the wrong parcel, the wrong boundaries, or references a plat lot that was later replatted.
Overlapping boundary descriptions between adjacent parcels that create conflicting ownership claims.
How Title Insurance Protects You
Even a thorough title search can't catch everything - public records have errors, fraud happens, and some liens are recorded in jurisdictions outside the standard search area. Owner's title insurance fills that gap:
What Title Insurance Covers (After Closing)
- Forged deeds or signatures in the chain
- Undisclosed heirs making ownership claims
- Liens not found in the search
- Recording errors in public records
- Fraud by prior owners
What Title Insurance Does NOT Cover
- Issues you knew about before closing
- Defects created after the policy date
- Zoning violations you create
- Environmental hazards
- Physical property condition
Frequently Asked Questions
What is a lien on a property?
A lien is a legal claim recorded against a property that must be satisfied before clear title can pass to a new owner. Liens include mortgages, judgment liens, tax liens, mechanic's liens, and HOA liens. They attach to the property - not the person - so unresolved liens travel with the property through any sale.
What is a cloud on title?
A cloud on title is any document, claim, or encumbrance in the public record that raises a question about ownership or limits the property's free use. Clouds include old unreleased mortgages, forged deeds, missing heir claims, and errors in legal descriptions. Title searches are designed to uncover these issues before closing.
Can you buy a house with a lien on it in Indiana?
Yes, but the liens must be resolved at or before closing. The title company coordinates payoff of liens from the seller's proceeds. Buyers should never close with unresolved liens - they become the new owner's obligation.
How does title insurance protect against undiscovered liens?
Owner's title insurance covers liens discovered after closing that were not found during the search - due to recording errors, fraud, or liens filed in other jurisdictions. The insurer pays to defend your ownership and, if necessary, resolves the lien at their expense.