Selling a home is challenging, but if you discover there’s a lien on your property, you must remedy the situation as quickly as possible.
Generally, a lien is a claim on your property due to money you owe to a claimant. And having a lien can put a real damper on selling your home and your credit.
But knowing what steps to take in this situation can help you complete the sale you are hoping for. Let’s take a look at what you should know about selling a house with a property lien.
Mortgage liens on homes and properties are quite common. If you have a mortgage through a bank or other lender, they are the primary lien holder.
And if you have a second mortgage or home equity loan, the lender is the secondary lien holder. These property liens or legal claims remain in effect until you pay off your mortgage or loan.
Other Types of Liens
There are situations in which you may have a lien assessed against you that is not related to your mortgage. For instance, an individual or business could assess a property lien against you if you fail to pay your property taxes.
You could have a lien placed if you fail to pay your utility bills or if you owe professional workers such as contractors or electricians who have worked on your home. In some cases, people are unaware of these involuntary liens.
These types of liens could be in relation to taxes, court rulings, child support, and other outstanding debts.
It’s important to check on the status of any liens you may have. Make sure they are released.
It is not uncommon for contractors to place liens on properties and then fail to remove them after receiving payment. So make sure the lien is valid, and if not, work to have it released.
Satisfy any Involuntary Liens
Any liens on your home are listed on the title report. And this could scare your potential buyers off.
It will raise questions in a buyer’s mind about other potential debts or issues with the property.
For this reason, it’s important for you to have the lien cleared as quickly as you can. If at all possible, you should take care of the debt and clear the lien before you try to sell your home.
If you have a lien due to back taxes, try to pay the taxes. And whenever you clear a lien, be sure to request a letter stating so.
Once you have this, you can have the lien released rather easily.
Disputing the Lien
If you feel certain that a property lien has been wrongly placed on your home, you do have some options. You should first plead your case directly to the creditor to see if they will release the lien.
If they refuse, you can file for a court decision on the matter, and if you win you could receive a release of the lien. However, if you don’t win, you could try to settle with the creditor for a reduced amount.
If this doesn’t work, you may need to pay it in full.
Be sure to document all communication, and you need to have any agreement reached between you and the creditor in writing. You want to keep excellent records in case you end up in court.
Selling your Home with a Property Lien
Although it is best to try to clear any outstanding involuntary property liens against your home before you sell, you can still sell even if there is a lien against your property.
If you are thinking of selling, be sure to conduct a title search to check for any liens on your property that you may not be aware of. This is critical because, if the debt is large, your property could be confiscated and then sold it to cover any outstanding liens.
You need to be aware of the amounts you owe. When you sell your home, the lien holders are paid with part of the sale proceeds. You receive the amount left over.
If you are planning on trying to sell your house with a lien on it, you want to make sure you consult a real estate expert to help guide you through the process.
You want someone who is knowledgeable and can negotiate with lien holders and ask for a full or partial lien release.
Creditors will often settle, and that can save you a lot of money. Most will negotiate to get whatever they can if the alternative is getting nothing.
Have a Game Plan
If you decide you want to sell your home with a lien on it, there are certain steps you should take to do this successfully.
First, you need to evaluate any liens or judgments against your property. Although the procedures are different depending on the lien type, they can often be easily resolved.
Then, you have to find a buyer. And many people are wary buying a home if there’s a lien on it.
In fact, that’s a complication most people don’t want to deal with. And it can be a real dealbreaker.
And you may not want the creditor to know you intend to sell your home. They could feel like that information gives them the upper hand in negotiation over the lien.
Selling a house with a lien on it is a complicated process. Make sure you get expert advice and someone to guide you through the process.