Selling a house is already a challenge as it is and getting the value that you’ve spent on your house is more problematic because most buyers would try to bring the value down as much as they can.
This is not the only problem that you will have to face when selling a house. You will encounter a lot of issues that would require professional help. One of these is selling a house with a lien.
A lien is known as a claim on the property due to the money that you owe to a certain claimant. These claimants have the right to keep possession of your property until the debt is paid and no one would take the risk to buy a house with a lien on it. With all these in mind, can you sell a house with a lien?
What Happens When You Have a Lien on Your House?
A lien is a legal claim on your property. Like what we mentioned a while ago, the claimants have the right to take your property to pay your debts.
Having a lien in your house or property allows an organization or an individual to legal claim the property or to use this as leverage to fulfill all the debts of the owner.
If there is a lien in your house, it is already a red flag for the buyers and it would be extremely difficult to sell your house. It is possible, but you have to resolve the issue first before anyone would have the interest to buy your house.
Common Types of Liens
Can you sell a property with a lien on it? Yes, but it would depend on the type of lien. There are some liens that would be paid or settled completely when the house is sold, but there are also some liens that are too pricey that even the cost of the house would not be able to cover it. If you have this type of lien on your property, it would be very difficult to find a buyer that is willing to take the risk.
If you want to know the different types of liens, here are some of the common types.
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Unpaid Contract Work on the House
This is actually a material man’s lien and it would come from the contractor who worked on your home or a certain business that provided the materials. If they have not been paid within the last 90 days, they would have a claim on the property no matter how much of a debt you have with them.
This type of lien is very easy to handle because you only need to pay the materials or the work that they have provided to your house and you will be cleared to sell your house. You can also talk with them and negotiate if you can wrap the cost by paying the lien after the house is sold.
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HOA Lien
A homeowners association can also file a lien on your property if you failed to pay HOA fees or you broke some of their rules.
This type of lien is very easy to handle as well since you only need to pay the fees and you can already proceed with the selling of your house.
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Department of Revenue Lien
If you failed to pay state taxes, the Department of Revenue can file a lien on your property. You will need an attorney or CPA to help you with this. You can also ask them if you can just pay a portion of your debt if the lien is too much for you.
You can also substitute collateral if you have other properties. This is the fastest way to handle it since the lien will be transferred to a new property.
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IRS Lien
This is one of the most serious problems that you will encounter. It happens because of the nonpayment of federal taxes. You definitely need a CPA and an attorney to handle everything for you because you cannot do this alone. The IRS will not settle for anything less and it is very time-consuming as well.
How Long Does a Lien Last?
Once a lien is filed against your property, it would stay there until you have settled everything. If you have plans of selling property with a lien, you have to remove the lien first to make sure that you can sell it faster.
However, resolving the lien is not the only requirement to remove it. A release lien should be filed to remove the public records about the lien.
Disputing a Lien
Although it is a legal claim, there are instances where an improper lien is filed against your property. If you are sure that a certain lien claim is incorrect, there are three common options to consider:
- Dispute the lien immediately through statutorily preliminary means, a full-blown lawsuit, or demand against the claimant.
- To make sure that the lien will be cleared faster, ask the claimant to file suit.
- If you are not in a rush, just wait for it.
Can you Sell a House with a Lien on it?
As long as you can clear the lien on your end, you can already proceed with the selling of the house. There are also people who would take a risk in buying a house with a lien as long as the lien cost will not exceed the value of the house.
There are also investors who would take a risk, especially if the property is in a good location. If they think that the property is a good investment, they will be more than willing to buy the house.
Final Thoughts
Selling a house with a lien is very complicated and it requires the assistance of a professional. Even if the lien is not too serious, you still need help from lawyers or CPAs who can help you make the right decisions for your property. Once you’ve cleared the lien, selling your house will be a lot simpler.
