Sometimes, getting from under debt can mean selling your home. However, how can you relieve yourself of mortgage debt if your property has a lien attached?
More than likely, a property sale will bring any related legal problems to light. A property lien is a serious issue that you must deal with before you can close the sale. Property liens give a creditor the right to possession of your property until you pay any debts.
To learn more about your options when selling a home with a lien, continue reading.
What Are Liens?
A credit error can prove problematic if you’re trying to buy a home. Likewise, a property lien will cause similar grief if you want to sell your property.
A property lien will most often show up when a bank or potential buyer does a title search. A title search is a legal check on the ownership of your property.
If there’s a problem with your title search, it will more often than not delay the closing. For this reason, you need to deal with the lien before you can sell your property.
A lien on a house is a legally binding claim that another party has on your property. It allows them to access your property if you do not pay your debts.
A creditor must file a property lien with the county clerk’s office or a state agency. Next, the appropriate office will approve or deny the claim.
The office that records the claim will then deliver notice to you with the terms of the lien. In short, the notice will explain that a creditor has taken action against your property.
A creditor can place liens against property for tangible items such as your car or boat. However, they can also file for a property lien against your home.
For instance, a bank would file for a property lien if you fall behind on your mortgage payments. Usually, a property lien is a last resort action to recover a debt.
Who Can File a Lien Claim?
The courts will award a property lien after a creditor has made numerous attempts to collect payment. For example, the creditor may have hired a collection agency to recover the debt.
A property lien is a very effective way for a creditor to recover a debt. However, it’s also particularly stressful for debtors.
With a bank loan, for instance, a lender can file for a first-order property lien. A bank may apply for this kind of lien after you’ve missed several mortgage payments.
A lender has specific rights regarding how they can use a property as collateral against a mortgage. For this reason, it’s quite easy for a bank to obtain a property lien for delinquent mortgage payments.
Can You Sell a House With a Lien?
In short, yes. You can sell your home if a creditor has placed a lien on it.
You could try to close a sale without help. However, the process is long and complex. It’s also stressful and financially draining.
Various types of creditors may place a lien on a house. For instance, you may have an outstanding debt with a bank, homeowner’s association, or the state or federal government. These parties all have the power to prevent you from selling your home if the courts have awarded a lien.
However, creditors don’t want your home. They want their agreed-on payment. To that end, a property lien gives them the right to sell your home to recover the delinquent debt.
Once you pay the debt, the creditor will issue a Letter of Satisfaction. However, creditors take advantage of the fact that most homeowners don’t know their rights when it comes to property liens. The typical homeowner doesn’t understand the options that they can use to resolve a lien.
If you’re trying to sell your home, this fact adds to the problem. If a creditor knows that you want to sell your home, they’ll use that fact as leverage to collect the debt. Often, a homeowner will end up with more problems from debtors that use circumstances to their advantage.
For these reasons, it’s beneficial to seek financial help when you’re trying to sell a property that’s under a lien. An experienced lawyer, for example, can help you to navigate the process.
What Are My Options Regarding Property Liens?
If you decide to resolve the issue independently, you’ll need to start by evaluating the lien. In other words, you’ll need to figure out what kind of liens and judgments creditors have against your property.
The procedure for different liens varies. Some liens on a property are nonnegotiable. However, you can settle other kinds of liens with little or no money.
Next, you’ll need to find someone willing to purchase a house with a lien. Most often, buyers and realtors view a lien is a major problem.
No buyer or agent wants to deal with a stubborn creditor. For this reason, they won’t pursue a property purchase until you’ve paid all debts in full.
Instead of going it on your own, it makes sense to hire an experienced real estate attorney. An expert attorney can make a big difference in your ability to sell your home that’s under a lien.
A knowledgeable real estate attorney can make sure that you say the right things to creditors. For instance, it’s a good idea not to tell a creditor you’re trying to sell your home. As soon as you give them this information, they’ll use it to pressure you.
In other cases, the creditor will lie in wait for your settlement payment. Once you receive it, they’ll claim the funds. If they win, a judge might award them compensation directly out of the closing proceeds.
It can prove difficult knowing what to say when talking to creditors. An experienced attorney can help you navigate this kind of minefield. To learn more about working with a professional real estate attorney, take a look at this article by Fernald Law Group.
Mulling Over a Lien Sale
If you need to sell your home and there’s a lien on it, it’s in your best interest to work with a professional real estate lawyer. There are a lot of nuances when it comes to liens on property.
For example, each state has different rules about the statute of limitations for liens. Even if a lien expires, however, a creditor can refile a lien and extend it in most states.
For this reason, it’s important to have an experienced professional on your side. A professional understands how to overcome the challenges of selling a house with a lien. More importantly, a creditor is more likely to negotiate with an expert who understands lien laws.
Learn More, Know More, Do More
Now that you know more about property liens, you can hopefully make a more informed decision about what you’ll do next.
Life has its challenges. Navigating some of life’s challenges, such as liens against property, can prove downright perplexing. Fortunately, there’s help.
With the right information, you can make it through the toughest obstacles that come your way. Check out our blog for more insightful news and tips for help navigating business, pleasure, and life.