Q When my uncle died, he left his property to his children and my brother and me. We are now in escrow to sell the land and find that we have both a lien from a bank for a loan we believe our uncle paid off long ago and we also have a mechanic’s lien. We don’t know the person who put the mechanic’s lien on the property and the bank has long since been sold. Any recommendations on how to simplify this problem?

A We are fortunate in the U.S. to have strong property ownership laws. Countries that have clear and enforceable real estate laws are overall more economically stable, experience lower crime rates and citizens feel more vested in how their country is run.

When we buy real estate or receive it as a gift, we get a “deed” which evidences our ownership. If seven families bought and sold your property before you, this chain of title is recorded in the county records. The records also show liens on the property and, in the best of circumstances, show release of these liens, as well.

Liens occur on property title in several ways: If you get a mortgage to buy property, the lender secures their loan by placing a lien on title. This way, if you fail to pay, they can foreclose and take the property. Also, when you sell, the loan would be paid off so the new buyer gets “clean” title to the property. Unfortunately, the system is not perfect because even in the best of worlds we can have lazy bankers and forgetful contractors. It is incumbent on the owner of the property to be sure liens are properly released.

Additionally, careful attention must be paid to how we deal with property title. We recently encountered an issue with a client that went like this: Mary was elderly and moved to a senior facility. She wanted to sell her home and found a good buyer. In escrow, however, the title officer informed Mary that her daughter’s name was on title and would need to sign as a seller along with Mary. Confused, Mary contacted her daughter, Grace, who reminded her that Mary had put the house in joint tenancy with Grace years before. “But, dear,” Mary said, “That was so you would get it if I died without going through probate. I need the money from a sale to live on.” Grace insisted she was entitled to half the sales proceeds so Mary lost her good buyer and instead needed to find a lawyer.

More in keeping with your situation: Frank and Ann got a loan with better terms from Bank B and refinanced their home. The new loan paid off their previous loan from Bank A and, over time, the couple paid off Bank B’s loan. Ann died and Frank decided to downsize but, again while in escrow, Frank found that neither bank had removed their liens from title. With Ann gone and Bank A no longer in business, Frank had to hire a lawyer to work through the mess of getting the old liens off title. Wasted time and money to clean up something that should have been done by the lenders. Unfortunately, this happens all the time.

When making home improvements, contractors will often place a mechanics lien on property title. When the job is done and they are paid, the contractor should remove the lien. If the removal of the lien is overlooked, it can cause problems and delays down the road should you decide to sell or refinance, as you are now finding. My recommendation is to check with your title officer to see if they can help. If not, your only option is to find a real estate attorney who can help you clear off the old liens.

As owners, we must take the responsibility when it comes to clean property title. If you pay off a loan, get a “Deed of Reconveyance” from the lender.

If you hire contractors, confirm that mechanics liens have been removed and never, ever put title in joint tenancy with anyone before speaking with your lawyer.

Liza Horvath has over 30 years of experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831) 646-5262 or email liza@montereytrust.com