Can A House Be Sold With A Lien On It?

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“When selling your home, but there is a lien, you may wonder, “Is it possible to sell a house with a lien?” For more information, can a house be sold with a Lien on it? It is already challenging to decide whether or not to sell your home, especially when there are many pros and cons. When your house has a lien, it may make your decision even harder. Liens can appear on a property for various reasons, but they all have one thing in common: they make selling it more difficult—but not impossible—to sell.”

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Can A House Be Sold With A Lien On It?

So, what is the answer of the question, “Can you sell a house with a lien on it?” Yes. However, it may be more complex. To make a well-informed decision, you’ll need to know everything you need to know about selling a house with a property lien.

 

Lien: What Is It?

The first thing you need to understand about selling your home with a lien is what a lien is, which is a claim placed on property or assets by a creditor as collateral.

To understand liens, you should know the following:

  • Property owners may assume liens as collateral for loans if they unpaid taxes, file a lawsuit, or voluntarily take them on due to tax liens.
  • In the case of an unpaid debt, the creditor may seize the debtor’s property or assets.
  • There is no lien on your property if your creditor does not file and win a lawsuit to establish a lien. A credit card debt, a medical bill, or a personal loan cannot place a lien on your property.
  • The lien on your property can result from debts not subject to a lawsuit, such as tax bills.

 

Can Someone Sell A House With A Lien On It?

The sale of a home with a lien on it is impossible. You must first resolve it. There are several ways to do this.

You may owe money to someone or an entity, and they are holding your home as collateral. A lien represents your creditor’s legal interest in your home. To sell something you don’t own, you must clear your debts before you can sell something you don’t own. Therefore, you’ll need to dispute or resolve the lien before selling. You can use the proceeds from your home sale to remove the lien.

We may need to inform you about several liens on your property.

  • Loans from home equity, which are voluntary
  • A contractor’s lien is a debt for work performed on your property
  • The IRS or a state or local government has unpaid tax liens
  • You may be liable for court judgments against you if there are judicial liens
  • Outstanding HOA dues lead to liens against HOAs

If there are errors in county records, you can dispute a lien or settle with the creditor to remove the lien. It’s also possible for certain types of liens to expire after a certain period.

There are many reasons why pending home sales fail. You can avoid issues if you know what you’re dealing with, and you’ll be able to close the deal smoothly.

 

Liens against Property Types

There are two types of property liens: voluntary and involuntary. Mortgage liens, for instance, are voluntary; borrowers agree to record a lien against their property as collateral to secure the loan. Other liens are involuntary; they result from a judgment won against a creditor or a plaintiff.

 

Lien on a mortgage

Most property liens are mortgages. There are usually two priority levels with mortgage liens: primary and secondary.

  • Primary lien: Primary lien is the first mortgage, and lenders always want that priority lien first.
  • Secondary lien: As a homeowner who has taken out a mortgage to encumber the property to buy the house already has some home equity against which to borrow, Donaldson explains that a second mortgage may be possible. The lender must hold a second-priority lien on the property to be eligible for the home equity line of credit.

 

Liens on taxes

It is possible to record tax liens on homeowners’ properties if they owe back taxes. Homeowners can resolve the debt by paying the back taxes. However, they can also hire a real estate attorney to dispute or negotiate the lien.

A tax lien usually precedes a primary mortgage lien and all other liens. To mitigate risk and protect the lenders’ interest in the property, most mortgage lenders include property taxes in mortgage payment schedules, and they pay them on behalf of borrowers through escrow accounts.

Taxes owed to the IRS by property owners can also be subject to IRS liens. To collect on a tax debt, the federal government can foreclose on a property if it does not receive the money it deserves. Nonpayment of state or local taxes and levies can also result in state and local governments filing tax liens.

 

Lien for judgments

As a result of a judgment issued by a judge against a property owner, damages remain unpaid; a judgment lien appears on the property. A judge must approve a judgment lien before selling a house.

 

Liens for child support and alimony

Property owners who fail to pay alimony or child support can have a lien placed against their properties. A judge may allow them to sell the property, but they may wait for approval.

 

Lien on HOA property

A lien may arise when a homeowner association still needs to pay its dues or fines. The association may also initiate foreclosures, even if the mortgage payment is current.

 

Lien for mechanics

It is possible to record a mechanic’s lien or a construction lien against a property 90 days after the construction work is due for unpaid. Mechanics liens are similar to other liens, which cloud a property’s title and make it hard to sell. These liens include:

  • Liens for material or suppliers: for contractors who provide building materials or home improvements
  • Liens against designers: about unpaid services by engineers, architects, and other designers

 

Selling Steps

There are several types of liens, and your state’s laws will differ. But generally, you’ll need to dispute or resolve the lien, which may take legal assistance.

  1. Check your property for liens and validate them
  2. Negotiate or dispute the lien with the help of a lawyer
  3. Clear the title by paying the lien
  4. Sell your home by reviewing your options
  5. Transparency is critical during the entire process
  6. Cash offers are available

 

Identify and validate any liens on your property.

Another possible scenario is that the house had a lien on it when you inherited it or bought it at auction, and you were unaware of it.

It’s good news that this information will be available to the public. You can access your county recorder’s or assessor’s website to check for liens against your address.

In addition, you can find liens on your property for a fee using a website like Property Shark. Alternatively, you can obtain an Owners and Encumbrance (O&E) Report from a title company. Your financial situation will determine the next step if the lien is valid.

 

With the help of a lawyer, dispute or negotiate the lien.

You should seek legal advice to dispute the lien or attempt a settlement. It is possible to file a spurious lien action against your lien if you believe it is invalid or is not legal. You can file a spurious action in court if you think your lien is invalid or illegal. It can be challenging to remove a tax lien, so talk to a lawyer. They’ll ensure the IRS gives you a discharge certificate and that the process proceeds correctly.

 

With the help of a lawyer, dispute or negotiate the lien.

 

There are varying laws surrounding mechanic’s liens, so if you suspect the lien may not have been filed legally, you should consult a lawyer. It might be possible for you to dispute the lien if your contractor needs to point it out sooner after completion.

Using the help of a lawyer, you may negotiate a settlement with your creditors.

After you have paid your creditors, your lawyer will release the lien in writing once the amount has been paid. Contact the appropriate party and provide evidence of a lien release if a lien has already been paid but still appears in public records.

 

Clear the title and pay the lien.

Before selling your home, paying off debts may be the easiest way to remove liens. The lien release will clear the title and prevent any problems with closing. You can borrow against your home equity to pay off the debt. Also known as the lien discharge or termination form, it may also state that the debt has been paid off.

 

Sell your home by reviewing your options.

If you have handled the liens, you must plan how to sell your home. It is feasible to sell your home by traditional real estate agents who promote it through the MLS. This may make sense in cases where your house is in marketable condition. However, other options exist if you need more money for repairs and want to sell fast.

Getting cash offers from investors without having to accept them is the goal of Attorney Real Estate Group. You can field multiple offers and sell your house as-is. In addition, you can close as quickly as ten days with our marketplace, creating competition and a higher price for your home.

 

Transparency is critical throughout the process.

Dishonesty is the number one killer of deals. If you decide to sell your house, let all parties involved know there is a lien on your property before going under contract and closing.

Once the lien has been paid and you have obtained a certificate of discharge or lien release, update everyone on how to resolve the issue so you can transfer the title freely and clearly. This way, you will ensure no hiccups when navigating the lien payoff process when selling your home.

 

Take advantage of cash offers.

Obtain a payoff letter from your creditor that details how much you owe, and give it to your escrow agent if you intend to repay your creditors. In addition to paying off debts, you can use the money to purchase a new house, pay off any other debts, or invest in your future.

You can use the cash to resolve the situation, but some money will go towards resolving the problem. This may complicate a traditional sale, but selling with Attorney Real Estate Group streamlines the process. You won’t have to worry about buyers backing out before you can clear the clouded title. Getting a quick close and cash without costly repairs could save you time and money.

 

FAQs about Selling a House with Liens

 

Can I stop the sale of my home if I have a lien on it?

Selling a home with an involuntary lien attached is possible but may not. A title search usually reveals liens and more about a property. A settlement company, title company, or attorney does it for buyers. The buyer might leave the deal if they discover an involuntary lien on the property.

 

Do you have the option of selling a house with a lien on it yourself?

If your house has a lien, you can sell it yourself, but there may be better ideas. It is best to partner with an experienced real estate lawyer instead.

 

What is the expiration date of liens?

Liens do indeed expire in some cases, but the laws regarding liens vary by state. You can consult your real estate lawyer about determining if any liens have passed on your property.

 

Do you think it’s terrible to have a lien on your house?

When a home has involuntary liens on it, you may have difficulties selling it. Resolve involuntary liens, such as contractors, judgments, and tax liens, quickly to avoid issues. This will avoid headaches. A voluntary lien does not constitute a wrong if you continue to repay your mortgage.

 

Is there a way to prevent a lien on my home?

The good news is that paying what you owe will prevent an involuntary lien on your home. For example, you could have a lien placed on your home due to unpaid property taxes or someone renovating your home.

 

Conclusion

Selling a house with a lien requires thorough preparation. You need to be careful and involve a professional. To succeed, you must understand the effects of liens. You must resolve them and work with experts.

A vital part of the process is doing a thorough property lien search. You must then tell potential buyers about the lien and get any needed releases or satisfactions. As long as individuals follow these guidelines and use the expertise of real estate attorneys, agents, and title companies, they can successfully sell a home with a lien.

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