Maryland Contract Lien Law: Does This Hurt Your Credit Score?

Act Scope

The Maryland Contract Lien Act allows for a lien to be created in several different situations. The first is when the ability to place a lien is written in the contract. The second are liens created through breach of contract. This lien is written specifically against a particular asset, and the asset must be specified within the contract. No matter what type of asset the lien is against, it appears in public records on your credit report.

Credit Effect

Public records, such as mechanic's liens, negatively affect your credit. If this is the only negative mark on your credit, then the effect can be quite large. If this is one of many bad credit marks, then you will be less affected, although the lien will still show some downward movement of your credit score. The negative effect on your credit lasts until the lien is removed or it is older than seven years and removed from your credit report.

Asset Effect

The main purpose of a lien such as this is that you are unable to sell the property it is attached to until you pay it. If you have a lien on your car, you need to pay off the lien amount before the lien is removed from the title. Otherwise you will be barred from selling the car. The same happens on a larger scale should you try to sell your house, although some buyers may have no problem with paying off the lien for a house sale.

Lien Release

Once you have paid the lien amount, you need to get the lien released from the property. The company will provide you with the lien release and you will file this with your local courthouse. Once you have done so, you are now free to do what you wish with that particular piece of property. You can sell it or simply rest assured that the title is now free and clear.