A lien on a property (a property lien) is a legal claim placed by a creditor to hold your property as collateral for missed payments. A lien is placed on your property until you have paid off all of your debt from your creditor. Property liens will impact your ability to sell a property or refinance your mortgage for a lower rate, so it is important to get a lien removed.
The types of property liens include:
- Tax Liens: A lien placed on your property by the IRS for failing to pay your taxes.
- Judgment Liens: A lien placed on your property by a court for failing to pay a creditor.
- Mechanic’s Lien: A lien placed on your property by a court for failing to pay a contractor in full.
- HOA Lien: A lien placed on your home by your local HOA for failing to meet your dues.
If you discover a lien has been placed on your property there are ways you can have the property lien removed.
The first option many people take is to contest the lien in court. But if that does not work, then you will have to come to terms of agreement with the entity that placed the lien on your home to figure out a solution. We go into this more below.
With that said, failing to pay a lien could result in your home going to foreclosure. Fortunately, most creditors will give you every opportunity to pay off the lien before beginning the process of foreclosure.
And good news, property liens are not as uncommon as you may think. Unanticipated property tax hikes, contractor disputes, or changes in employment that impact your ability to pay your mortgage are all common issues that affect millions of Americans just like you each year.
If you find yourself dealing with a pesky property lien or just have questions on how to sell a home with a property lien, then you’re in luck! Below you’ll learn what options you have available to navigate through the world of property liens.
How To Find Liens on a Property
You can find property liens by going to the local county clerk’s office and looking through the public record. This is one of the things a title company will do during a title search if you’re selling your home. The county clerk should have a paper trail available to lead you to any existing liens that may be on your property from you or a previous owner. This is your best bet if you’re looking for how to find out if there is a lien on your property.
Now that you know how to find a property lien, let’s look at how property liens can impact home sales and what options you have to remove them.
How Do Liens Impact Home Sales?
Liens can impact home sales by making it difficult for traditional buyers to secure financing through a traditional mortgage as a lien may prevent the title from being able to transfer from the seller to the buy. In order for a clean transfer of title, all property liens need to be cleared in order for the buyer to rightfully own the property. But that doesn’t always mean the seller needs to pay off the property lien. You as the seller can always have the home buyer pay off the lien and clear the debt, if the buyer is really interested, but this will likely impact your selling price by reducing the amount the buyer will pay.
While property liens don’t always need to be disclosed by federal law, most lenders require a lien to be cleared up before you can sell your home through traditional means.
However, there are still options available to sell a home with a lien. In fact, “we buy houses” companies like us purchase properties with liens across the country to free homeowners like you facing financial burdens a way out.
With that said, if you are not quite ready to sell your home or want to explore other options, here is the basic process to help you get a property lien removed.
How to Get a Property Lien Removed
There is a general five-step process to get a lien removed from a home:
- Review the terms of the lien to negotiate a repayment plan
- Pay off the existing debt
- Draft a release-of-lien form with an attorney
- Get the lienholder to sign and agree to the terms of removal
- File the release-of-lien form with your local county clerk’s office
If you do not wish to pay off the lien or feel that it was placed on your property in bad faith, you can contest the property lien in a court of law. This can be a very long and very expensive process, so contacting the party that placed the property lien on your property and trying to workout a deal in good faith is a good first step.
Nonetheless, if you cannot remove the lien through legal means, then you still have two options:
- Pay off the existing debt
- Sell your home
Paying off the existing debt on the lien can be done through a negotiated payment plan or a lump-sum settlement in most cases. If you cannot afford to pay off your lien, your only solution will be to sell your house for cash to a buyer that does not mind a property lien and the lien will become their headache, not yours.
And now you know what a property lien is and how to get a lien on a property removed. And while some property liens, such as a mortgage lien, can be beneficial to the ownership of your home, others can be detrimental. Having said that, property liens don’t need to destroy your financial well-being, and you have solutions available to help you walk away from a pesky lien burden.