Can You Sell a House with a Lien? (Yes, Here's How)

Finding out there's a lien on your property can feel like hitting a brick wall when you're trying to sell. Maybe you knew about it, maybe you didn't - either way, you're now wondering: can I even sell this house?

The short answer is yes. You absolutely can sell a house with a lien on it. I've bought dozens of properties with liens over my 15+ years in business. Tax liens, judgment liens, mechanics liens, you name it. These situations are more common than you might think, and they're almost always solvable.

Let me walk you through everything you need to know about selling a house with a lien - what types of liens exist, how they affect the sale, and your options for moving forward.

What Exactly Is a Lien?

A lien is a legal claim against your property that gives a creditor the right to be paid from the proceeds when you sell. Think of it as the creditor placing a "hold" on your house until a debt is satisfied.

Liens are attached to the property, not to you personally. This means if you sold the house without addressing the lien, the new owner would inherit the problem. That's why title companies search for liens before any sale closes - to make sure all claims against the property are identified and resolved.

The key thing to understand is that liens must typically be paid off or otherwise resolved before you can transfer clear title to a buyer. But "resolved" doesn't always mean "paid in full" - there are often creative solutions available.

Types of Liens You Might Be Dealing With

Not all liens are created equal. Here's a breakdown of the most common types and how they typically affect home sales:

Mortgage Liens This is the most common type of lien and the one most people don't even think of as a "lien." Your mortgage is a lien against your property - it gives the bank the right to foreclose if you don't pay. When you sell your house, the mortgage gets paid off from the proceeds at closing.

For most sales, this is completely routine. The title company calculates the payoff amount, deducts it from the sale proceeds, and wires the money to your lender. You only have a problem if you owe more than the house is worth (underwater mortgage), which requires a short sale.

Property Tax Liens When you fall behind on property taxes, your local government places a tax lien on your home. In New York and New Jersey, unpaid taxes accrue interest and penalties that can add up quickly.

Property tax liens take priority over almost everything else - they're called "super-priority" liens. This means they get paid first at closing, even before your mortgage. The good news is that tax liens are straightforward to resolve: you pay the taxes owed (including penalties and interest) and the lien is released.

If you're significantly behind on taxes, the amount owed will simply be deducted from your sale proceeds. As long as you have enough equity to cover it, this isn't a dealbreaker.

IRS Tax Liens If you owe federal taxes, the IRS can place a lien on your property. These liens are public record and will show up in a title search.

IRS liens can be trickier than property tax liens because the amounts are often larger and the IRS has specific procedures for releasing liens. However, the IRS will typically release a lien if the full amount will be paid from the sale proceeds. In some cases, they'll even agree to a partial payment if that's all the sale can yield.

If you have an IRS lien, you'll need to work with the IRS (or have your title company do so) to get a "discharge" or "subordination" of the lien for the sale to proceed.

Mechanics Liens If you hired a contractor to work on your house and didn't pay them, they can file a mechanics lien (also called a construction lien or contractor's lien). This gives them a claim against your property for the unpaid work.

Mechanics liens have strict filing deadlines - contractors must file within a certain number of days after completing work. If the deadline has passed, the lien may be invalid. Even if it's valid, mechanics liens are often negotiable. The contractor wants to get paid something; they're usually willing to settle for less than the full amount rather than get nothing.

Judgment Liens If someone sues you and wins, they can take that judgment and attach it to your property as a lien. Common sources of judgment liens include:

• Credit card lawsuits
• Personal injury settlements
• Business debts
• Divorce settlements
• Unpaid child support

Judgment liens can be challenging because the amounts vary widely and the creditors have different motivations. Some will negotiate; others won't. The good news is that judgment liens are typically paid from sale proceeds, so as long as you have equity, the sale can proceed.

HOA Liens If you live in a community with a homeowners association and you've fallen behind on dues, the HOA can place a lien on your property. HOA liens can also include fines for rule violations, special assessments, and attorney's fees.

HOA liens are usually smaller than other types but can still complicate a sale. Most HOAs will provide a "lien release letter" showing the exact amount owed, which gets paid at closing.

Child Support Liens Unpaid child support can result in a lien against your property. These liens are taken seriously by title companies and courts, and they generally must be satisfied for the sale to close.

How Liens Affect the Home Selling Process

When you go to sell your house, here's what happens with liens:

**1. Title Search** The title company conducts a thorough search of public records to identify any liens against your property. This search looks at tax records, court records, UCC filings, and other databases.

**2. Lien Discovery** Any liens found will be listed on the title commitment. This document shows what needs to be cleared for the title to transfer.

**3. Payoff Calculations** The title company contacts each lienholder to get exact payoff amounts. This includes any interest, penalties, or fees that have accrued.

**4. Closing Disbursement** At closing, the title company pays off all liens from the sale proceeds before giving you your check. Lienholders are paid in order of priority (generally: property taxes first, then mortgages, then other liens by date of recording).

**5. Title Insurance** The title company issues title insurance to the buyer guaranteeing clear title. They won't do this if there are unresolved liens.

Your Options for Selling with Liens

If you have liens on your property, here are your main options:

Option 1: Pay Off the Liens at Closing This is the most straightforward approach. The liens get paid from your sale proceeds, and you receive whatever's left over.

• For example, if you sell your house for $350,000 and have:
• $200,000 mortgage
• $15,000 in property tax liens
• $8,000 judgment lien

You'd net $127,000 at closing ($350,000 - $223,000 in liens).

This works as long as you have enough equity to cover all liens plus closing costs. If you're underwater (liens exceed property value), you'll need a different approach.

Option 2: Negotiate with Lienholders Many lienholders will accept less than the full amount owed, especially if:

• The alternative is getting nothing (if you declare bankruptcy, for instance)
• The lien has been outstanding for a long time
• The full amount would leave you with nothing from the sale
• They want to avoid the cost and hassle of collection

I've seen judgment creditors settle for 50 cents on the dollar. I've seen mechanics accept 75%. It depends on the situation, but negotiation is often possible.

You can negotiate directly with lienholders, or have an attorney do it on your behalf. Some title companies will also help facilitate these negotiations as part of getting the deal closed.

Option 3: Short Sale If your liens exceed your property's value - meaning you're underwater - a short sale might be an option. In a short sale, your mortgage lender agrees to accept less than what you owe.

Short sales are complicated and require lender approval. They can take months to complete and aren't guaranteed to work. But they're better than foreclosure and can help you get out from under an impossible situation.

Option 4: Sell to a Cash Buyer This is where companies like mine come in. Cash buyers like Easy Sell specialize in complicated situations, including properties with liens.

Here's why selling to a cash buyer often makes sense when you have liens:

• We understand liens and aren't scared off by them
• We have experience working with title companies on lien resolution
• We can often negotiate better settlements with creditors
• We close quickly, which matters if liens are accruing interest
• We buy as-is, so you don't have to worry about repairs on top of lien issues

When you sell to us, we work with the title company to get payoff amounts, negotiate where possible, and structure the closing so that all liens are satisfied. You get whatever equity remains - and more importantly, you get out from under a stressful situation.

Our Process for Properties with Liens

At Easy Sell, we buy properties with liens all the time. Here's how we handle it:

**Step 1: You contact us** and tell us about your property and your situation, including any liens you're aware of.

**Step 2: We evaluate the property** and the lien situation. We'll pull preliminary title to see exactly what's recorded against your property.

**Step 3: We make you a cash offer** that accounts for the liens. We'll explain exactly how the numbers work and what you'd net at closing.

**Step 4: If you accept, we handle the lien resolution.** Our team works with the title company and lienholders to get payoffs, negotiate where possible, and clear the path to closing.

**Step 5: We close** and you walk away free from the property and its liens.

We've successfully closed on properties with tax liens exceeding $50,000, judgment liens from decades-old lawsuits, and mechanics liens from contractors who walked off the job. These situations are solvable - they just require experience and patience.

What If Liens Exceed Your Property's Value?

This is the toughest situation: when you owe more than your house is worth. Your options are more limited, but you still have some:

**Negotiate with creditors.** Explain the situation and offer what you can. Many creditors will accept a partial payment rather than get nothing.

**Short sale.** If your mortgage is the primary issue, your lender may agree to accept less than what's owed.

**Deed in lieu of foreclosure.** You transfer the property to your mortgage lender and walk away. This avoids foreclosure but you don't get any money.

**Bankruptcy.** As a last resort, bankruptcy can eliminate some debts and potentially strip certain liens from your property.

**Wait.** If your property value is likely to increase over time, waiting might eventually put you in a better position. But this carries risks if liens are accruing interest.

If you're in this situation, I'd recommend consulting with a real estate attorney who can evaluate your specific circumstances and options.

Common Questions About Selling with Liens

Can I sell my house if I have a lien I didn't know about? Yes, but you'll find out about it during the title search. Unknown liens are common - maybe a previous owner had a judgment, or there's an old tax lien that wasn't properly released. The title company will identify it, and it will need to be resolved before closing.

Will liens affect my sale price? Not directly - your house is worth what it's worth regardless of liens. But liens do reduce what you'll actually receive at closing since they're paid from your proceeds.

Can I sell my house with an IRS lien? Yes, but you'll need to work with the IRS to get the lien discharged for the sale. They'll typically agree if the sale will pay off the debt, but it requires paperwork and time.

What if a lienholder won't negotiate? Some won't. In that case, the full amount has to be paid from sale proceeds. If that leaves you with nothing or puts you underwater, you may need to explore other options like bankruptcy or a short sale.

How long does it take to sell a house with liens? It depends on the liens. Simple property tax liens might add just a few days to get payoff letters. Complex situations with multiple judgment liens and negotiations can take weeks. Cash buyers are generally faster than traditional sales because we're experienced with these situations.

Get Help with Your Lien Situation

If you have a house with liens that you need to sell, don't assume you're stuck. In my experience, almost every lien situation has a solution - it just takes finding the right one.

At Easy Sell Property Solutions, we specialize in exactly these kinds of complicated situations. We've bought houses with every type of lien imaginable, and we've helped homeowners get out from under properties they thought were unsellable.

Here's what we can offer:

• Free evaluation of your property and lien situation
• Cash offer that accounts for all liens
• We handle the lien resolution process
• Close in as little as 7 days once liens are cleared
• No fees, no commissions
• Compassionate, no-judgment approach

Call us at 631-400-EASY (3279) or fill out the form on our website. Tell us about your situation, and we'll give you an honest assessment of your options. Even if selling to us isn't the right move, we can point you in the right direction.

Liens are stressful, but they're solvable. Let us help you find a way forward.

Frequently Asked Questions

Can you sell a house with a tax lien? Yes. Property tax liens are paid from sale proceeds at closing. As long as you have enough equity to cover the taxes owed plus other costs, the sale can proceed normally.

Do I need to pay off liens before listing my house? Not necessarily. Liens can be paid at closing from sale proceeds. However, some buyers may be hesitant about properties with significant liens, and it can complicate financing.

What happens to liens when you sell a house? Liens are paid off from the sale proceeds at closing. The title company handles the payoffs and ensures clear title transfers to the buyer.

Can a lien stop a house sale? A lien can delay or complicate a sale, but it rarely stops one completely. If there's enough equity to pay off liens, the sale proceeds. If not, there are options like negotiation or short sales.

Will a cash buyer purchase a house with liens? Many cash buyers specialize in properties with liens. At Easy Sell, we regularly buy houses with tax liens, judgment liens, mechanics liens, and other encumbrances.