Indiana Real Estate Liens Can Delay Or Derail Property Closings
Buying or selling a property in Indianapolis should be a straightforward real estate transaction. Unfortunately, a single unpaid lien discovered during a title search or another stage of the process can bring an entire deal to a halt. And this happens far more often than many buyers and sellers realize.
According to the American Land Title Association (ALTA), title professionals find defects in roughly 25 percent of all property titles nationwide. And according to ATTOM's Year-End 2025 U.S. Foreclosure Market Report, foreclosure activity rose nearly 14 percent year over year in 2025, increasing the likelihood that unresolved liens will appear in Marion County and other communities throughout Central Indiana.
So what exactly is a lien? What types show up most often in Indianapolis real estate transactions? What happens if one surfaces before closing? And what can buyers and sellers do to protect themselves? Our Indianapolis real estate attorneys at Hocker Law, LLC, explain how liens work under Indiana law and why experienced legal guidance before closing can make a major difference.
What Is A Lien And Why Does It Stay Attached To The Property?
A lien is a legal claim against a property that secures an unpaid debt or obligation. Under Indiana Code Title 32, Article 28, liens on real property are governed by detailed statutes that define who can file them, how they must be recorded, and what happens if they remain unresolved.
Once a lien is recorded with the county recorder’s office where the property is located, it attaches to the property itself, not simply to the person who owes the debt.
That distinction is critical for buyers. Purchasing property with an unresolved lien can mean taking on responsibility for someone else’s debt. A lien does not automatically disappear simply because ownership changes hands. It remains attached to the property until the underlying obligation is fully resolved and a formal release is recorded.
This is why a thorough title search remains one of the most important parts of any Indiana real estate transaction. Lien records are public records and can typically be searched through the county recorder’s office. In Marion County, which includes Indianapolis, many of those records can also be reviewed through the county’s online property search systems.
Identifying liens before closing gives buyers and sellers the opportunity to resolve problems proactively instead of facing delays while everyone is already sitting at the closing table.
What Types Of Liens Show Up Most Often In Indianapolis Real Estate Transactions?
Not all liens are the same. Indiana law recognizes several different types, each carrying its own filing rules, enforcement procedures, and resolution requirements.
The most common liens appearing in Indianapolis real estate transactions include:
- Mechanic’s Liens: Under Indiana Code § 32-28-3-1, contractors, subcontractors, suppliers, laborers, and design professionals who were not paid for work performed on a property may file a mechanic’s lien. Indiana generally requires mechanic’s liens to be filed within 90 days after the last work or material delivery for commercial property, and within 60 days for residential property.
- Property Tax Liens: When property taxes remain unpaid, the government may place a tax lien against the property. Tax liens typically take priority over most other claims and must often be resolved before any clean transfer of title can occur.
- Judgment Liens: Under Indiana Code § 34-55-9-2, certain court judgments automatically become liens against a debtor’s real estate once properly entered and indexed. These liens can remain active for up to ten years and continue accruing interest.
- HOA Liens: Under Indiana Code § 32-28-14, homeowners’ associations may file liens for unpaid dues, assessments, or fees. These issues often arise in Indianapolis-area subdivisions and planned communities.
- Federal Tax Liens: The IRS may place a lien against real property for unpaid federal taxes. Federal tax liens are particularly serious because they can complicate both financing and title transfer during a real estate transaction.
Each lien type requires a different process for resolution, and timelines can vary considerably depending on the claim involved. An Indiana real estate attorney can help determine whether the lien is valid, whether it was properly recorded, and what options exist for resolving it efficiently.
How Do Unpaid Liens Affect A Real Estate Closing?
When a title search uncovers an unpaid lien, the transaction does not always collapse immediately, but it almost always slows down.
Mortgage lenders generally require a clear title before approving or funding a loan, and most buyers understandably do not want to inherit unresolved legal claims tied to the property.
Common outcomes after discovering a lien include:
- The seller pays the lien before closing and obtains a recorded release.
- The lien is paid directly from the seller’s proceeds at closing through escrow.
- The parties negotiate a reduced settlement amount with the lienholder.
- The seller challenges the validity of the lien through legal action if it was filed improperly or attached to the wrong property.
One of the most difficult situations occurs when the seller either cannot pay the lien or refuses to address it. At that point, buyers may need to decide whether to renegotiate the purchase price, walk away from the transaction, or pursue a quiet title action through the Indiana courts.
A quiet title action allows the court to determine ownership rights and remove invalid or disputed claims against the property. Indiana courts regularly handle these cases when title issues cannot be resolved through negotiation alone.
How Can Buyers And Sellers Protect Themselves?
For buyers, one of the best protections is a thorough title search combined with title insurance. Title insurance helps protect against undiscovered liens, recording errors, and other title defects that may not appear during the initial search process.
For sellers, identifying potential lien problems before listing the property can prevent major closing delays later. A pre-listing title review often gives sellers time to resolve issues before a buyer becomes involved.
Sellers should also confirm that previously resolved liens were properly released and recorded. A debt may be fully paid while the lien still appears active in public records because the release was never filed correctly.
Both buyers and sellers often benefit from working with an Indiana real estate attorney who understands local title procedures, Indiana lien laws, and the practical realities of resolving title disputes before closing deadlines become urgent.
How Can Hocker Law Help Resolve Indianapolis Lien Issues?
Hocker Law, LLC has represented buyers, sellers, landlords, investors, and property owners throughout Indiana since 1993. Our real estate attorneys understand how liens affect transactions under Indiana law, what steps are required to clear title efficiently, and when litigation may become necessary to protect a client’s interests.
Whether you are purchasing your first home, trying to sell a property with title complications, or dealing with multiple competing claims on an investment property, our legal team can help you evaluate your options and move the transaction forward.
Contact An Indianapolis Real Estate Lawyer
If a lien is threatening to delay or derail your Indianapolis real estate transaction, contact us for a free consultation. Our Indianapolis real estate lawyers proudly serve clients throughout Indiana from offices in Indianapolis and Greenwood.
"As a real estate investor, I have used Hocker Law for all my business needs. When I began investing, I would regularly ask Janet questions, and she would promptly reply with great insight. When I began building my portfolio, I entered a lawsuit and an eviction case, and Janet successfully helped me with both cases at the same time. Her paralegal Emily was also spectacular. She answered all my questions and kept me updated on both cases when she had news to share. I would highly recommend Hocker Law as they provide great service and ability to win lawsuits." – Dylan V., ⭐⭐⭐⭐⭐