In this guide, we\u2019ll fill you in on everything you need to know about selling a house with a lien and the steps to take to get to the closing table.<\/p>\n
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\n <\/div>\n \n Stressed About Selling a House With a Lien?<\/h3>\n
Sometimes the easiest way to sell a house with a lien is to get a cash offer from an investor who is familiar with the process of resolving the title issue and can walk you through it. Take the next step by providing some information through our Simple Sale platform and we’ll help show you some potential options.<\/p>\n \n
Can you sell a house with a lien?<\/h2>\n
Homeowners can sell properties with liens. For a buyer to take possession of the property, the seller will need to clear title<\/a> and satisfy all outstanding liens.<\/p>\n Stephen Donaldson, a real estate attorney and founder of The Donaldson Law Firm<\/a> in New York, explains that creditors record liens in the county clerk\u2019s office in order to protect their interest. \u201cThe lien puts the world on notice of the creditor\u2019s interest in the property.\u201d<\/p>\n \u201cIf an owner tries to sell their house, a title search<\/a> will identify any liens recorded against the property. In order for the sale to occur, the title company ensures that any liens are satisfied at closing so the buyer can take title free and clear of any liens.\u201d<\/p>\n The following payment options are worth considering to clear your title:<\/p>\n Property liens can be voluntary or involuntary. Mortgage liens, for instance, are voluntary; the borrower agrees to have a lien recorded against their property as collateral for the loan. Other liens are involuntary; they\u2019re recorded by a creditor or a plaintiff who won a judgment for an unpaid debt.<\/p>\n The most common type of property lien is a mortgage<\/a>. There are typically two levels or priorities of mortgage liens: primary and secondary.<\/p>\n Primary lien:<\/strong> The first mortgage is the primary lien. \u201cA mortgage lender <\/a>always wants to make sure they have that first priority lien,\u201d says Donaldson. \u201cIf a homeowner defaults, the lender wants to ensure they get as much money back as possible first without any regard to the second lien holder.\u201d<\/p>\n Secondary lien: <\/strong>If a homeowner already took out a mortgage to be recorded against the property to buy the house, they already have some home equity<\/a> and may wish to borrow against that equity from the same or a different lender, Donaldson explains, in the form of a second mortgage<\/a>.<\/p>\n \u201cIn order to get that home equity line of credit<\/a>, that lender would have a lien in the second position or a second priority lien,\u201d according to Donaldson.<\/p>\n The government has the power to record tax liens<\/a> on properties when the homeowners owe back taxes<\/a>. To remove the lien, the property owner will need to satisfy the debt. Homeowners can also enlist the help of a real estate attorney<\/a> to either negotiate or dispute the lien.<\/p>\n Tax liens often take priority over all other liens, including primary mortgage liens. This is part of the rationale behind most mortgage lenders including property taxes in mortgage payment schedules, and paying taxes on behalf of the borrower through an escrow account \u2014 it helps mitigate risk and protect the lenders\u2019 interest in the property.<\/p>\n The federal government also has the power to file IRS liens<\/a> against property owners who fail to pay back income taxes on money they\u2019ve earned. When IRS liens remain unpaid, the federal government can foreclose on a property<\/a> to collect the debt. It\u2019s also important to note that state and local governments may also file tax liens for nonpayment of state or local levies and taxes.<\/p>\n Judgment liens<\/a>, or judicial liens, are recorded against real estate when a judge issues a judgment against a property owner who loses a lawsuit and court-ordered damages remain unpaid. Selling a house with a judgment lien requires court approval.<\/p>\n If a property owner fails to pay court-ordered alimony or child support, a lien can be placed against the property. The judge may allow the owner to sell the home \u2014 however, court approval can take a long time, reports Helali.<\/p>\n Homeowner associations can record liens for unpaid dues<\/a> and outstanding fines. HOAs may initiate foreclosure<\/a> even when mortgage payments are current if the state and the association\u2019s covenants, conditions, and restrictions allow it.<\/p>\n\n
Types of property liens<\/h2>\n
Mortgage lien<\/h3>\n
Tax lien<\/h3>\n
Judgment lien<\/h3>\n
Child support and alimony liens<\/h3>\n
HOA lien<\/h3>\n
Mechanics lien<\/h3>\n