A lien can be described as a public record that is filed on a particular property with the local record office. It can also be described as claim filed against your house in other to secure the repayment of an obligation. A property lien is a frequent method used by real estate creditors to collect their debts. Selling a house can be very difficult due to the existence of liens on that property. Total right is given to a creditor because of liens. And if you don’t settle the lien, you won’t be able to sell your home. If you are in a very bad situation and you really need to sell your house to raise money, then it’s advisable to quickly settle the liens on your property in other to avoid major deal breaking delays.
When you are indebted to a creditor in other to finance the buying or construction of a property, the creditor files a lien claim with the clerk of your local public records. This gives the power to seize your house if you are not willing to pay for debt.
Types of Liens
Mortgage is the most popular type of lien but there are various types, like the mechanics liens for construction contracts that was half paid or not fully paid for and the tax lien for properties that owes taxes.
When you get a loan from a lender to finance property, the lender files a lien with the county clerk. This gives the lender the right to seize the property if you don’t pay the loan. If you have a mortgage with Bank A from 2014 and another with Bank B from 2015, Bank A has first rights to the property. If you satisfy Bank A’s mortgage, Bank B becomes first priority. Any future filings will be secondary to Bank B. when this rule is excludes, it becomes a tax lien which is always the first priority.
The exception to this rule is a tax lien, which always takes first priority. You won’t be able to sell your house to buy a new house while your liens are still in place and valid.
There are two types of tax liens on a property, which are the one that comes from the local public records and the one placed by the IRS on your property.
The lien filed by the local public records is as a result of you not paying your property tax in tour local county. The local authorities in your county can place a lien on your house if you won’t pay your home taxes. The local public records will send a letter if you don’t pay your taxes for some years, and if you refuse to pay the taxes, you will lose your home.
The other type of lien that can be placed on you property is the one filed by the IRS if you are behind on taxes. This usually happens in an area where the property tax to house ratio is very high. The IRS is responsible for filing a lien against your property. A lien file on your house by the IRS is not yet official until you receive a notice of an IRS tax lien. A lien can only be triggered by the IRS if you owe at least $5000 in taxes. To find out more information about a tax lien if you visit the IRS public records or any online public record on tax lien.
Selling your house is one of the solutions out there when you want to discharge the tax lien attached to your property. This is a very difficult task, and it is only possible if you have an equity that is enough to discharge the lien on your home and have some cash for other activities. Selling a house with lien is not an easy task because the process is more complicated than you think. The reason is that most potential buyers do not like buying properties that has issues in any way. It’s possible to find a potential buyer, but he or she won’t want to meet your asking price. Below are ways in which you can sell a house with liens quickly.
It’s important for you to understand the current situation of the lien on your property and contact the local authorities in other to ensure if you are qualified for discounts on your tax. This discount might be a homestead exempt for individuals who are over 65 years or are under a kind of disability. In Texas, you can get in contact with the local county tax office to know more about the tax lien on your property.
Before you sign a contract with any real estate agent, it’s important to make a research on your lien. The place where your house is located is the place where liens are filed. Research through the website your local tax office to know if it can contain an online search. The address is the minimum information you need, but it is also advisable to have the parcel, lot or block number. the tax assessment is the easiest place to get your information’s. You can also call or visit the clerk at the local tax office to guide you on the detailed information to help your research.
Also, it is important to make research on the value of your home in the market and list it with a real estate agent who has the knowledge of the local market conditions and your neighborhood
Removing the Lien
To sell your property after verifying that there is a lien existing, it is important you satisfy it. Meet with the holder of the lien for a figure to pay off the lien. The payoff figure could include the amount owed, interest and any additional charges. Paying off what you owe is only half of the process, the lien holder has to cancel the lien. And this depends on how fast the lien holder acts and the volume of work at local clerk’s office, which can take up to several months to process. Ensure you contact the lien holder and make a request that he endorses the lien for cancellation and directly collect it from the lien holder, in other to avoid problems when selling the property. Make sure you make copies of the document endorsed by the lien holder and take the original to the local clerk to cancel the lien.
Your Asking Price
The next step when you want to sell a house with lien is to know beforehand the amount in which the sale of the house will fetch you which includes any additional fee. Also, you should know the cost of lien fees, closing costs and appraisal cost. in other to bring the house up to standard, the cost of repair is also needed. Note that there might be other taxes that you should pay which are in addition to the taxes on your property from the local authority. These taxes might be MUD taxes, school taxes and so on. For this, it is advisable for you to contact your utilities company and school system. All these listed above will make the bill larger than you expect.
Locate a qualified buyer
It’s not an easy task to find an individual interested in buying a property with lien. Real estate agents and buyers view judgments and lien as a major issue, so they ensure you pay all the debts in full before buying. For instance, if they run into a lien holder that is very difficult in dealing with, the most likely they will give up on buying your house and leave you high and dry with hopes.
Get a buyer who does not only understand why you need to sell your house with liens but can secure the releases of the liens on your home and negotiate with the lien holder a reduced settlement.
Hire the services of an expert
It’s advisable to hire an experienced investor, expert or title company to offer you guidance on how to discuss with your lien holder when settling the liens. Most times, it’s best not tell the lien holder that you need to pay off your lien because it gives them the upper hand. it’s advisable not to let the lien holder know that the release of the lien is because of a potential sale of your house because they will wait for the settlement payment on the house, having the knowledge that the closing proceeds will cover it. You have a lot to know, so it’s very important that you hire an expert or experienced investor to help you with this process.
Completing the Sale
After cancellation of the lien on your home, you can also show a potential buyer that the lien on the property is clear. Once the sale of the house is completed, you can use the funds to purchase a new property. For a smooth transaction on the purchase, research if there is an existing lien on the property you want to purchase. This prepares you of any potential obstacles you will face when buying the new house.
Consult with an Expert
Need some more advice with a house or rental property you are planning to sell?