The housing market can be a volatile one. Interest rates change, supply and demand affect the market, and terminology can confuse those who don’t routinely work in real estate. They say, “buyer’s market,” they say, “seller’s market,” and you aren’t sure where you belong. Then, your agent asks if there are any liens on the property or any judgments against you.
Your mind is reeling with questions. Can you sell a house with a lien on it? What is a lien? Can you sell your house with a judgment against you?
Let’s talk about selling a house with a lien. We’ll discuss what a lien is, what types of liens there are, how you can learn if there is a lien on your house, and finally, how you can sell a property with a lien—if you can. First, let’s answer the question, “Can I sell a house with a lien on it?”
Can a House Be Sold With a Lien on It?
Can you sell a house that has a lien on it? It’s possible. However, it’s a more complex process that depends on the kind of lien you have and how well your creditors will work with you.
Typically speaking, you will have to resolve the lien either before closing or at closing. Occasionally, investors will handle a lien on a house after closing. However, most individuals will not. They expect a clean title when they take ownership of the home.
What Is a Lien?
A lien is a claim that a creditor has against real property. A mortgage, for example, is one kind of lien. However, a known lien like a mortgage isn’t why real estate agents ask if there’s a lien on a home.
Can you sell your house with a lien on it? With some difficulty, yes. That will not clear you of your debt unless your buyer is willing to assume the lien. Usually, you have to pay the lien at closing if you haven’t done so before.
What Types of Liens Are There?
We can list different creditors who might place a lien on your home, but there are two kinds of liens, voluntary and involuntary liens. Everything else falls into those categories.
Voluntary liens are those you willingly agree to pay. These are no surprise to anyone unless, of course, there are some trust or identity theft issues. Generally speaking, selling a property with a lien such as this is a routine process. Here are the two most common voluntary liens:
· Mortgages—unless you are independently wealthy or came into an inheritance, you likely have a mortgage. Houses are sold with a mortgage lien daily.
· Home Equity Loans—home equity loans are another loan that realtors and lenders deal with at closing routinely. Likely this lien was awarded to pay for home improvements or other unexpected bills. You should expect to pay it out of your earnings from your home’s sale.
Involuntary liens sometimes occur without your knowledge. Typically, you consented to them when you signed a contract with a third party that had nothing to do with your house. Selling property with a lien that is involuntary, while not impossible, can be more difficult. These are the most common involuntary liens.
· Property Tax Liens
· IRS Liens
· Mechanics Liens
· HOA (Homeowners’ Association) Liens
· Child Support Liens
· Other Judgment Liens
How Can I Find Out if There Is a Lien on My House?
Property liens are a matter of public record. When a lien is placed, or a judgment is filed against you, notification is sent to the clerk or assessor in your area. The clerk or assessor can give you information about any liens or judgments against your house.
You’ve spoken to the property records clerk and discovered there is a lien on your home. Can you sell a house with a lien on it? What do you do? There are steps you can take to sell property with a lien, but you may have some work ahead of you.
Selling Property With a Lien
Selling a house with a lien is more complicated than selling one with a clear title. Here are five tips for selling a home with a lien.
1. Clear the Lien
The easiest way to sell your home is to make sure you pay the lien first. If you don’t have cash on hand, it could be paid at closing out of your proceeds from selling your house.
2. Negotiate With Your Creditor
Even after a lien has been placed or a judgment has been rendered, you could have the ability to negotiate a satisfactory disposition of the lien. It’s wise to enlist the assistance of a real estate attorney if you plan to arrange for any changes to a property lien.
3. Transfer Your Lien to Other Property
In some instances, you can transfer the lien from one property to another that you own. This is another complicated process, and you should consult an attorney before attempting to negotiate this transaction.
4. Transfer the Lien to a Buyer
An investor or a real estate agent who purchases property to resell might assume the obligation. Some buyers may be willing to accept the lien on the property as part of the sale. However, typically, an individual won’t be willing to take on your debt.
5. Dispute the Lien
If you think the lien is in error or you’ve already satisfied the obligation, you can dispute the lien’s validity. It’s best to retain an attorney to assist you with discussing any liens.
Can you sell a house with a lien on it? The short answer is yes. Selling a house with a lien requires extra steps that selling without a property lien doesn’t need. Most buyers won’t purchase a home if they think they will be responsible for someone else’s debt.
Barrington Acquisitions is a family owned and operated real estate investment company with offices in Charleston, SC, Atlanta, GA, and Columbia, SC. We focus on offering homeowners like you, win-win solutions to your real estate related problems. We buy houses in the following areas –