Acquiring Privately-Owned, Vacant Lots for Gardening:
Liens and Debt: How to Handle Encumbered Property
You are gardening on a vacant lot that is privately-owned. You are interested in acquiring this property one day. However, unlike City-owned vacant land, privately-owned lots may carry layers of unpaid debt by the absentee or deceased property owner.Information about what unpaid debts, or liens, exist on the property is critical if you wish to obtain free and clear title—or title without any debts or liens—to a property.
Title to property is a legal term for the bundle of rights, such as enjoyment and use of a property, that come with ownership.
How are possession, ownership, and title to property related?
Title is evidence of legal possession of a property. A document indicating title is often necessary to prove ownership and transfer ownership to another. As a gardener on a vacant lot, you may have physical possession of a property, but you do not have title—both the right to possess property and the legal possession of property. With legal possession also comes the responsibility for all taxes and maintenance of the property.
What is “encumbered title” versus “free and clear title”?
“Free and clear title” just means that no one has a hold or right to the property because property owners or purchasers have paid off any debt that may have existed, or there was never any unpaid debt to begin with. A title is “encumbered” if there are mortgages, liens, or other debts attached to a property. Once debts are paid, however, the owner may enjoy free and clear title to his or her property.
What types of debt could an owner incur on a property?
In Philadelphia, owners may have various types of debt, including licenses and inspections (L&I) liens, mortgage liens, gas liens, real estate tax liens, water and sewage liens, and utility liens.
What is a lien?
A lienis the interest over a property to secure the payment of a debt. Lenders use liens to secure, restrict the use of, or encumber property where debts owed have not been paid.
How is a lien different from other types of debt?
Liens differ from other types of debt because they give the lender the right to seize property. For example, if a property owner does not pay real estate taxes, the city of Philadelphia can file a court action to give the City an “interest in” the property equal to the amount of unpaid taxes. The City can then execute upon the lien, or its “interest in the property,” by selling the property at sheriff’s sale and collecting the money owed to it from the sale proceeds.
The following types ofliens can help you determine what kinds of debt are attached to the property where you’re gardening. For the most part, tax, L&I, gas, and water liens are the most important to consider, since the largest sums are typically owed with these liens.
Licenses and Inspections (L&I) liens
- What are they? L&I liens are imposed against the property owner for failure to pay fees for demolition, trash removal, etc.
- How do I determine if this lien exists on my garden? For a map detailing licensing and inspection violations, see: http://www.phila.gov/map and select “violations” and “view map.” Often, if you review on the map where demolition has occurred, there will likely be a related demolition lien that has not been paid. In certain circumstances, the City has forgiven L&I liens in order to clear title to the land.
- What are they? Mechanics liens are available to contractors and subcontractors, and place a hold on the title to property so that the property can’t be sold without the owners first paying the contractor or subcontractor.
- How do I determine if this lien exists on my garden? Contractors and subcontractors can file a lien claim with the Court of Common Pleas, and you can search for pending or previous mechanics lien actions brought against a property owner in the Philadelphia Court of Common Pleas at courts.phila.gov (under “search court records” click “trial division-search civil dockets,” then “search by person name or company name”).
- What are they? Mortgage liens are legal claims against a mortgaged property, which must be paid when the property is sold.
- How do I determine if this lien exists on my garden? You can search for pending or previous mortgage foreclosure actions brought against the property’s owner in the Philadelphia Court of Common Pleas at courts.phila.gov (under “search court records” click “trial division-search civil dockets,” then “search by person name or company name”). The absence of a mortgage foreclosure action, however, does not always mean that there is not an outstanding mortgage on the property.
PGW (Gas) liens
- What are they? PGW liens, or Gas liens, are filed against properties for unpaid gas bills.
- How do I determine if this lien exists on my garden? The Department of Records at City Hall has this information. You can also search for execution actions involving gas liens. These cases occur when the City files a lawsuit against a property owner for the amount of unpaid gas bills. To search online, go to courts.phila.gov; under “search court records,” click “trial division-search civil dockets,” then “search by person name or company name”).
Real estate tax liens
- What are they? Real estate tax liens may be issued by local governments as a way to collect real estate taxes that have gone unpaid by property owners. If the taxpayer does not pay the taxes due, the tax lien holder can gain title by foreclosing on the property.
- How do I determine if this lien exists on my garden? The City’s Office of Property Assessment (OPA)’s “property search” feature provides information about a property’s real estate tax charges and real estate tax liens here: http://opa.phila.gov/opa.apps/Search/SearchForm.aspx?url=search. The “view tax balances” tab shows overdue real estate taxes by year, and indicates whether the lien is held by the City or an outside collections agency. You can also research real estate tax liens via the Prothonotary’s Locality In Rem Index at City Hall, room 262. For a “how to” on researching these liens in this index, see courts.phila.gov/pdf/forms/Prothonotary/Instruction-Real-Estate-Tax-Liens.pdf.
- What are they? Utility liens are imposed against property for unpaid utility bills.
- How do I determine if this lien exists on my garden? The Department of Records at City Hall has information on utility liens. You can also search for execution actions involving utility liens at www.courts.phila.gov (under “search court records” click “trial division – search civil dockets,” then “search by person name or company name”).
Water and Sewer liens
- What are they? Water and sewage liens are imposed against property for unpaid water or sewer bills.
- How do I determine if this lien exists on my garden? You can research whether a property has overdue water or sewer charges in the Prothonotary’s Locality In Rem Index at City Hall, room 262. For a “how to” on researching these liens in this index, see:courts.phila.gov/pdf/forms/Prothonotary/Instructions-Locality-In-Rem-Index-Water-SewerCharges.pdf
What if the privately-owned property where I’m gardening has a lien or other debt attached to it?
If you are not considering ownership, but are just interested in using the land for a period of time, then liens and debts on the land are irrelevant. If you are trying to gain title to the property in order to ensure your garden’s security in the long-term, however, liens and debts are critical to consider. Gaining ownership of a property burdened by debts or liens means you will be responsible for paying off debt. Of course, getting the lien or debt paid by the owner before the land is sold is the simplest way to remove a debt or lien. However, where the unpaid debt cannot be afforded by the owner or possessor, or where the owner is absentee or deceased, paying off the lien or debt is the least likely way to remove it. The city of Philadelphia must then play a key role in getting a lien cleared in order for title to transfer.
Other than paying off the debt, what other tactics can I use to get liens or other debt removed so that I can own the property “free and clear”?
Currently, the Garden Justice Legal Initiative, L&I, the Law Department, various City agencies, and advocates are developing solutions to return privately-owned vacant lots to productive uses in Philadelphia. Interim solutions to put these vacant lots to use include: sheriff’s sales, eminent domain, adverse possession, conservatorships, and connecting owners of vacant properties with Community Development Corporations (CDCs) and other community resources. See the Garden Justice Legal Initiative’s factsheets: Acquiring Privately-Owned, Vacant Lots for Gardening: Adverse Possession, and Acquiring Privately-Owned, Vacant Lots for Gardening: Tactics for Ownership to learn about these solutions.
These factsheets address some basic points of property law and debt and lien processes. It is recommended that gardeners with remaining questions contact the Garden Justice Legal Initiative or an attorney. In addition to this factsheet, gardeners interested in acquiring vacant lots should consult the Garden Justice Legal Initiative’s Acquiring Privately-Owned, Vacant Lots for Gardening series of factsheets for specific tactics to gain ownership.