Do you know what a lien is? And would you know what to do if you were trying to sell a house with a lien on it? Trying to sell your house under the most ideal conditions on the open market can already present enough challenges to a homeowner. But if you’re trying to sell a house with a lien attached, you’ve added a whole other layer of issues and contingencies that are going to create problems for you and any potential market buyer. And if you really want a headache, try selling a house only to find out during the title search that there is a lien you were previously unaware of and now need to deal with. It’s the kind of thing that can stick a fork in any home sale.
Of course, having a lien on your house doesn’t mean you have to cancel all your plans. You can still sell a house with a lien on it, you just have to be smart about how you do it. You can avoid a whole lot of headaches, time, and potential costs by selling your house as-is to a cash buyer like Four 19 Properties. We buy houses with liens attached and we pay cash for them. But before we get into that, let’s dive into what a lien is and whether or not it will affect your home sale.
Lien and It’s Effects In A Home Sale
What is a Lien?
Before we get into how to sell a house with a lien attached and how that affects the sale, let’s make sure we’re clear on what a lien is. A lien is defined as a legal claim that is made by a person, company, or organization against a piece of property on behalf of a debt that has yet to be paid by the owner of said property. A lien exists to allow for that person, company, or organization to receive some potential compensation in order to satisfy the debts that the owner will not or has not paid. If you want to identify a lien, the easiest way is to look in public records. This way, other creditors can see that a lien exists and that may impact their decision to provide loans to that person.
The big takeaway is that a lien is attached specifically to a property, like a house, and not a person. So if ownership of a house is transferred, like in a home sale, that lien comes with it and becomes the responsibility of the new owner. That’s what makes buying a house with a lien attached so attractive for many market buyers. Very few of them even want to deal with that kind of problem, let alone have the means to. There are so many other houses to choose from that don’t have liens or financial issues attached, so your house really has to stand out for market buyers to consider it.
What Kind of Lienholders Exists?
There’s a misunderstanding that liens can only come from a government entity or bank. But liens can be assessed in many different ways and for many different reasons. For example, if a homeowner stopped paying child support, a court put a property lien on the house in order to ensure that debt gets paid, one way or another. Other ways that liens could be placed on your house include unpaid credit card bills and medical debts.
Let’s say you agreed to have work performed on your house by a contractor. They obviously expect to be paid for that work and you likely signed some kind of agreement to do so. But if you refuse or pay or fail to pay, they can place a materialman or mechanic’s lien on your property in order to get compensated. Also, any subcontractor can also place a lien on your property because they were unable to get paid by the main contractor. It’s often easy to settle these debts but they can also be negotiated into the sale price.
If you’re involved in a lawsuit and you lose, the party that won the lawsuit can file a lien against any property you own in order to collect. This is called a judgment lien and it’s a way for creditors and others to get paid even if you’re trying to avoid doing so.
If you fail to pay the appropriate fees to a homeowners’ association (HOA), they can file a lien on your house or property in order to get what’s owed. This also applies if you broke some kind of rules and didn’t pay the needed fine or recompensation. HOAs are known for being especially strict when it comes to following the rules and punishing those who don’t, so it’s not that unheard of to find out about an HOA lien. Make sure you read the HOA rules when you move in so you can avoid these.
Of course, if you fail to pay your taxes, the state department of revenue has the option to put a lien on your property. This is known, quite obviously, as a department of revenue lien. You can often with the agency to have this paid off or removed, or even moved to a different property you own, but you’ll want to make sure you consult an attorney or CPA who understand the best course of action. And of course, that means you’ll incur even more costs.
And if you don’t pay your federal taxes, the Internal Revenue Service (IRS) can absolutely put an IRS lien on your property. Failure to pay federal taxes is a pretty big deal and, of all the liens mentioned, this is the one you’ll probably want to try to avoid most. The IRS is notoriously difficult to deal with and you’ll need to involve accounting experts in order to make sure you can get the lien removed quickly. Anytime the IRS is interested in your finances or property, it’s a matter to take very seriously.
Get Rid of the Lien If Possible
If you want to try to sell your house on the market, your best bet is to attempt to get rid of the lien before selling. The odds that a market buyer will want to take on a house that comes with financial obligations to someone unrelated to them is very low. Even if you give them a concession on the sale price, there’s something that won’t sit entirely well with buyers that they have to pay creditors they never worked with in the first place.
You might be able to work with your creditors to have the liens removed, even if you don’t pay them off entirely. Sometimes, paying a percentage of the amount owed, or setting up a payment schedule, will be good enough for them to lift the lien. But you’ll still be responsible to satisfy whatever is outstanding or agreed to and you won’t be able to let the lien sit there this time.
Sell Your House As-Is
When a house has a lien on it, it creates a headache for anyone trying to sell a house with one. They deter market buyers and create concerns you’d rather not deal with. It also could lead to uncomfortable negotiations lost profits in any market sale you attempt.
That’s why it might make more sense to sell your house as-is to a real estate buyer like Four 19 Properties. We’ll buy your house even if there’s a lien attached and we will buy it as-is no matter what. Whether you’re dealing with liens, property damage, water damage, foreclosure, bad tenants, or any other kind of issue that makes it hard to sell a house on the open market, we will buy your house for cash and make your life easy.
All you need to do is contact us. We will reach out as soon as possible with questions. We might take a tour or want to meet to discuss the situation. Then we will make you a fair cash offer based on the current condition of the house. No lowball offers, we’ll even show you how we came up with the number! If you accept, we close on the sale whenever you want. Whether you want to close ASAP or wait a few weeks, we can work with you. Then you’ll get cash in your pocket and we will handle the house and any liens attached.