Can You Sell A House With A Lien?
Selling a house can be a stressful situation without any extra issues. However, if you find out there is a lien on your house, your situation just got a whole lot more complicated. There are a lot of important decisions you have to make that will impact the potential sale. It’s good to know that you do have some options, but can you sell a house with a lien?
What is a Lien?
First, we need to define what we’re talking about. A lien basically means that there is a financial claim on your house or property because of money that you owe to a claimant such as a bank or the IRS. Having a lien on your house can have some very negative effects on your personal credit and it can make it very hard to sell that home.
There are different kinds of liens. A mortgage lien is one of the more common ones. If you’ve taken out a mortgage loan through a bank or lender and then defaulted on the loan by missing payments, then they might put a mortgage lien on the house, making them the lien holder. If you took out a second mortgage or a home equity loan, that secondary lender in the lien holder. These liens will remain in effect until the financial requirements of the mortgage are in good standing or the mortgage is paid off.
There are many other reasons that a lien could be assessed against your property as well. If you fail to pay property taxes in a timely manner, a lien can be assessed by the local government. If you fail to pay utility bills, the utility company could assess a lien on the property to recoup those costs. If you owe contractors, electricians, or plumbers a large amount of money for work done on the home, they might be able to put a lien on your home until you pay what’s owed. The IRS or federal government could also issue a lien against your property over unpaid federal taxes. Other reasons for a lien could be because of unpaid child support, court decisions, and other debts.
***Always consult legal counsel before making a decision***
Investigate the Lien
Because there are so many different types of liens, each one comes with its own satisfaction requirements. Sometimes you can settle with the lien holder for a percentage of the owed amount. Other times you can get them to agree to lift the lien while you repay the debt. Other times, however, they will not budge until the loan is repaid or they own the property and can sell it to recoup their money.
If you’re serious about selling the house, you need to be serious about trying to pay off the lien. Any active lien will be present on the title report, which will be a serious red flag to any buyer. Chances are, it’s the kind of thing that will send them running, or at least make them question what else is wrong with the transaction.
If you are able to clear the lien, make sure you request a letter in writing that it has been done. This is to protect yourself in case the lien still shows up on the title report after repayment. Also, sometimes contractors will fail to remove liens after receiving payment, either willfully or by accident. You’ll want to be able to show a paper trail proving the lien is no longer valid.
Dispute an Incorrect Lien
Do you feel as though the lien has been incorrectly placed on the property? Consider your options. First, go to the creditor or lender and make your case as to why the lien should be released. Be prepared to prove this through paperwork and financial documentation. If they say no, hire legal representation and file a legal case in court. If you’re able to prove to the court that the lien is unjust, they will have it released. However, if you don’t win the case, you’ll be back where you started needing to settle with the creditor.
Ask for a Lien Release
If you’re unable to get the lien released but you still want to sell the home on the open market, you’ve still got some options. First of all, you’ll want to identify a real estate expert who understands this kind of situation. If you’re not able to satisfy the lien holder requirements, perhaps they can help you acquire a full or partial lien release.
This doesn’t free you of the lien obligation. Rather, because they like the idea of getting something rather than nothing, the lien holder might consider allowing you to list and sell the home with the understanding that the lender will receive a certain amount from the sale in order to satisfy the debt. Sometimes they’ll want everything they’re owed but sometimes they will accept lesser amounts in order to move the process along. Ultimately, no one enjoys drawing out this process, so if you’re open to getting them their money in any way possible, they’re apt to listen.
Sell Your Home to an Investor
A lot of what we’ve discussed can be very stressful and, perhaps even more important, very costly. If you find yourself with a house lien and you don’t have the money to satisfy it or a solid lead on a buyer who can take the home off your hands, your best bet might be to sell the home to an investor like Nexus Homebuyers who will buy it as-is.
It’s pretty common for homes with liens to be sold this way. You can avoid all of the costs and headaches that come with this kind of issue and get your time and life back. An investor gives you a fair cash offer and takes the home off your hands quickly so you can move on and start fresh. You don’t have to worry about the debt hanging over your head any longer.
If you’re interested in receiving a cash offer on your home, whether there’s a lien on it or not, click here to get started.