There is no doubt that selling a house can be a bit complex process, even if the situations are favorable, because you have to provide documents, meet contingency deadlines, and give additional reassurances to the tenant. The worst thing that an investor wants to know is selling property with a lien.
Holding the sales process while dealing with the lien can even confuse a qualified buyer and make him walk away from the deal. The process that involves selling a house with a lien against it can be even more complex, so when you know more about the available options, your home selling experience can indeed become much easier for you.
What is a Lien?
A lien can be defined as a public record that is filed with the help of an office of county records for the actual property. It is basically used by the creditors in order to announce their claim or right against a particular property. Property with a lien has certain limitations regarding what an owner is allowed to do.
Lien on a property is nothing that unusual as one can have a lien on a car if it is financed; there can be a lien against a home in case there are any mortgage payments to be made. Even temporary property tax liens between the property tax assessment time and the time the full payment is made.
There can be a few complications for both the seller as well as the buyer when the real estate with a lien is being sold. There are times when the creditors have property rights to make sure that they are to be paid for what they are owed before the deal takes place. There are cases where selling a home with a lien can give a legal right to the creditor for taking possession of the property and pay off the owed debt.
What kind of Lienholders are there?
There are two different types of property that liens can be filed on, i.e., real property and personal property. Land, house, and any permanent assets are included in the real property category, whereas personal property refers to the moveable assets like cars, equipment, animals, etc.
As the real property is considered the most valuable of the assets that a debtor can have, it is the first property that the creditor typically goes after with a lien. The following are the different kinds of lienholders.
- Tax Liens
These are known to be involuntary general liens and are created mainly by the federal and the state statute. So, when an individual or a business cannot pay their taxes, whether these taxes are local or federal, then the IRS or any of the government entities can place a lien on their property for the unpaid tax amount.
It is worth noting that this may include all the types like property taxes, income taxes, and business taxes. Here, one needs to understand that such types of liens typically don’t result in foreclosure sales, but they usually tend to stay on the property to pay them first.
- Mortgage Liens
These are the kinds of voluntary liens and are mainly used when any of the banks lend money for purchasing a home or refinancing it. Mortgages are basically secure loans that happen to create a mortgage a lien on the property. This means that the borrower has a promise for collateral so that the loan can be secured when they stop making any of the payments.
When it is about the mortgages, the property will be the collateral. When the borrower is not able to make the payments under any circumstances, the lender is allowed to take possession of the home or foreclose the property so that the balance can be paid off.
- Mechanics Liens
Mechanics Liens are among the most critical types of liens that people should familiarize themselves with, especially the ones in the construction industry. These liens are also voluntary and are made by statutory rights. Different states have different laws, which give laborers and construction businesses the right to claim a mechanics lien.
When the material supplier, the contractor, equipment lessor, or any other professional offer their services for the construction or the repair of a house, then the mechanics liens happen to arise. If a situation occurs where the parties are not being paid, then the business or the person can file a lien against the property that is being improved.
As the mechanics liens are statutory, therefore, you will be saying a few specific notice requirements and some deadlines that one needs to meet to secure the rights. It is also worth noting that they don’t last forever, while different states can set their own expiration dates for the mechanics liens. It is crucial for the unpaid contractor to enforce this claim before the state deadline is reached because otherwise, it may become ineffective.
- HOA Lien
A property that is owned by the real estate owners in a homeowner associated are placed with the lien on the home for any unpaid dues, fees for breaking any of the rules, or the special assessments that are unpaid, which include pavement of the neighborhood street or refurnishing of the community swimming pool by the HOA. There are a number of states as well as cities where HOA is strong enough to foreclose a house with an unpaid lien.
- Judgment Liens
When someone is able to win a lawsuit against the property owner, then a judgment lien is enforced. The court happens to award the damages and is able to record the judgment against the home. There are times when an agency or the collections attorney file a judgment lien, and there is a possibility that they may be more than willing to settle for an amount that is less than the actual one owed.
- IRS Lien
The IRS lien takes priority over all of the other liens, including mortgages and among the most serious ones. This clearly means that when you sell your house for cash, the first one to get paid before the lender is the Internal Revenue Service.
Although it is possible for the property owners to have a negotiation with the IRS in order to settle for the lien for an amount less than the one that is owed, it will always be the best move to hire an experienced real estate agent or the attorney to negotiate with the IRS.
- State Tax Lien
If you have any unpaid federal taxes for individuals or businesses, the State Department of Revenue or DOR will file a lien on your property. Those property owners who are not able to pay their tax liens in total have the option of negotiating a payment plan or a settlement.
There are times when DOR might be removing the lien from the rental property that is being sold and then place it to any other owner’s asset who may not be having tax debts, like the personal residence.
How to sell a house with a Lien?
You must be wondering how to sell a home with a lien on it because it may seem complicated, but you always have different options if you would like to move, but you have a lien on the house. Whenever you have a property with a lien on it, or there is a judgment against it, a house can be sold as it is. There are a number of homeowners who need to go through the entire process of selling their properties with liens; therefore, it is essential to have a little experience.
It is possible to solve the problems of purchased titles, but you must have some practice and some imagination. Even if your debt owed happens to exceed the value of the property, it is still possible for you to sell your home if you are asking can a house be sold with a lien on it.
At the start, you can contact the lienholder with the help of an expert in order to negotiate a partial or a complete release of the lien. It is pretty rare that the judgments from the credits are set in stone. If the lienholder is smart, he will always be able to take something rather than having nothing. You must try to make sure that you are fully informed about your rights, and you will not be giving any more information to the creditors than they actually need.
The settlements may not need to be paid by you before closing, and there are numerous ways through which one can pay a lien against the house. Usually, the seller happens to pay for these debts at closing, where the debts get deducted when the sale proceeds. This clearly means that you wouldn’t pay the upfront, but if you are able to find the right experts, you can be in a position to negotiate with the creditors for securing a full or a partial release of the lien, even when you are to settle the liens for pennies on the dollar. The following are some of the ways through which you can sell a house with a lien.
The risky way: Selling a house on your own with a Lien
One can surely sell a house with a lien on it, but the entire process can be complicated, strenuous, and quite stressful because your emotions are involved in it. Creditors may be completely aware that most people don’t know their options and rights when resolving a lien. With the help of an expert on your side who has a thorough understanding of liens, and selling a house with a lien, then it is pretty likely that the creditors will be negotiating, and so will be the one who buys house.
If you are to sell your house quickly, you surely need to consider different options that you have. Whether it is an individual, credit card company, IRS, or the tax authority, you can still be able to sell your home fast and then move on with your life, even if you don’t have enough home equity to cover lien, although selling a home with a lien can surely be a bit messy.
Reliable way: Fast selling home for cash
For the majority of homeowners, it is undoubtedly impossible to sell a property with a lien on it. Therefore, the best and the most reliable option is to sell the home as it is quickly for cash. This way, you can pay off the debts with part of the sale proceeds, and you also don’t need to invest in inspection fees, repairs, and any other home-selling expenses.
Although the process is complicated yet reliable, you should still know all the legalities of selling a property with a lien. There are a number of cases where selling a home in a quick manner not only gets you out from such issues but also gives you a quick infusion of cash so that you have the chance to get back on your feet. If you want this to happen, you will undoubtedly need help from professional realtors.
Why sell to Christian home buyers?
The best way for you is to go with a trusted real estate agent like the Christian Home Buyers if you would like to sell your home and have liens on it. Christian Home Buyers are entirely aware of the city and the surrounding areas, and this makes them fully experienced in handling liens.
Although you will be trying to find different ways to remove the liens by yourself, Christian Home Buyers have all the experience and information regarding helping you with all the expert advice. We will be helping you on who to settle with first, different ways of conducting the negotiation, and then folding all your debt payments into sales so that all of your benefits can be maximized.
It would be pretty helpful if you always remembered that a lien is a challenge whenever you try to sell your house, but it is worth noting that lien is not insurmountable, especially when working with the right team of realtors like the Christian Home Buyers.