Selling a House With a Lien
If you have a lien on the title of your home, selling that house can be quite scary and daunting. You’re going to have to address those issues before you can move forward with a smooth sale. It’s not uncommon for people to only just discover that they have a lien on their property during the sales process when the title search uncovers one. If this happens, it can be quite worrisome, but don’t stress too much yet. It is possible to deal with liens and still go through with the sale of a house.
To sell a house with a lien on it, you'll need to resolve the lien and ensure that the home sales process goes through. Here's what you can do.
How to Sell a House With a Lien
- Pay Off Your Debts
- Write the Lien Into the Settlement Agreement
- Dispute the Lien
- Use a Bond
- Hire a Lawyer
1. Pay Off Your Debts
The easiest way to sell a house with a lien is to pay off the debts related to the lien so that it can be removed. Paying off debts will be the most efficient way to clear your home’s title. But often, this can’t be done until the purchase process is completed because most people don’t have enough cash or liquid assets sitting around to pay off the debt just like that, or they wouldn’t have a lien in the first place.
2. Write the Lien Into the Settlement Agreement
If you are unable to pay off the lien before the sale closes, you can use the sale of your home and the proceeds that you get from that to cover any outstanding debts that you can’t afford to pay off. During this process, if you have the help of a real estate agent, they’ll be able to write the lien into the settlement agreement. Then, at closing, the lien will be deducted from the proceeds that you make from the sale.
3. Dispute the Lien
If you think the lien was placed on your property incorrectly or unfairly, there is the possibility to and dispute the lien. It isn’t uncommon for liens to be recorded incorrectly in some cases. But if you wish to dispute a lien you may well need to hire an attorney to help you.
4. Use a Bond
Taking out a bond is another option if you can’t afford to pay off any debts and get the lien lifted from your title. You could take out a bond to cover the cost which will help the sale of a house go through more smoothly, and then pay off the bond with the proceeds that you make from the sale.
5. Hire a Lawyer
In some more serious situations, or if you have multiple different liens on your property, you may well need to hire an attorney to take care of it. Clearing your title to ensure you can sell your home smoothly is very important, and an attorney will understand the ins and outs of how to make sure you can sort out the situation. You should also consider hiring an attorney if you plan to dispute the lien. For some common liens, the help of an attorney won’t be required. Liens such as unpaid service liens or simple fees can often be easily paid off. In many cases, the reason why these haven’t been taken care of is simply that the homeowner didn’t know they had a lien on the home until a title search revealed one.
Ways To Prevent Title Issues
1. Get Title Insurance
Title insurance is an excellent way to protect yourself from any liens on the home from a previous owner. Although liens will usually show up in a title search, title companies have overlooked liens in the past, and a homeowner has purchased a home with a lien on the title without realizing it. Title insurance makes sure that you’re protected from paying off any liens that you accidentally acquire.
2. Pay Bills and Taxes on Time
If you want to avoid any liens in the first place, the best thing you can do is to make sure that you pay everything when it’s due. Although sometimes this situation is much easier said than done, ensuring that you don’t get into debt is the best way to prevent a lien from being put on your home.
If you know that you have a lien, it’s important to be transparent with your real estate agent from the start. Real estate agents are often quite experienced in dealing with homes that have liens, but if they don’t know there is a lien on your property they can’t do anything about it! Of course, a lien will likely be discovered during the title search process, but if you suspect that there might be one, it’s much better to be honest up front. Finding out about liens ahead of time can help a real estate agent develop a plan of action and get ahead of the game.
Selling a House With a Lien Bottom Line
Although it’s stressful to try and sell at home with the lien, it isn’t impossible to do. It may be time-consuming, but for the most part, liens can be dealt with. Talk to your real estate agent throughout the sales process if you find out there’s a lien on your home to help develop a plan of action and make sure the sale can go through smoothly.