What Is a Lien?
A lien is essentially an unpaid bill that was secured by your property. In simple terms it means “a legal claim or right against a property.” It can be for unpaid taxes, a cash settlement a judge awarded against you or unpaid lawyer bills, or it can be for unpaid bills relating to a home improvement or renovation projects. One of the most common reasons for a lien is due to delinquent payments. Liens can be difficult sometimes to clear, but depending on the circumstance of the lien and whose it is, you can sell a house with a lien on it.
What Types of Liens can be Placed on a House?
- Mortgage Liens- when you take out a mortgage loan to purchase a home, the lender places a lien on the property as collateral for the loan. If you default on your mortgage payments, the lender can foreclose on the property to recover the unpaid debt.
- Judgment Liens- If you are sued and lose the case, the court may place a lien on your home to cover the damages awarded to the plaintiff.
- Mechanic’s Liens- If you hire a contractor to perform work on your home and fail to pay them, they may place a lien on the property to secure payment.
- Property Tax Liens- if you fail to pay your property taxes, the government may place a lien on your home. This lien must be paid before the property can be sold.
It’s important to understand the type of lien that exists on your property so that you can determine the steps you need to take to clear it.
Can You Sell a House With a Lien on It?
A lien doesn’t automatically prevent you from selling your home, but it does complicate the process. When a lien is recorded against your property, it creates a clouded title. This means the ownership of the property is legally encumbered and not “clear,” which makes it riskier for the buyer. Most buyers, and their lenders, expect to receive a clean title at closing. If there’s an outstanding lien, it must typically be paid off or resolved before the buyer takes ownership.
If you have the financial resources to do so, the easiest way to sell a home with a lien on it is to simply pay off the lien. This will clear the title and allow you to sell the property without any encumbrances.
If you can’t clear the lien, be aware that a buyer may expect specific concessions before they sign on your home and take over the title with the lien. Sometimes the best option is to consider selling your house “as-is”. Selling as-is would then allow you to pay off your debts a little with the sale and would eliminate extra fees such as repairs or inspections before you sell your house.
If you’re feeling overwhelmed by the process of selling a home with a lien on it, remember that you have options. With some careful planning and the help of a trusted professional, you can successfully sell your home and move on to your next adventure.
Step-by-Step Guide to Selling a House With a Lien
Selling a house with a lien isn’t impossible, but it does require careful planning and extra due diligence. Whether you’re dealing with a tax lien, contractor lien, or judgment lien, the key is resolving the issue so you can transfer ownership with a clear title. Follow these steps to streamline the process:
- Order a Title Search
Start by confirming whether there are any liens attached to your property. You can do this in two ways:
- DIY: Visit your local county recorder or assessor’s office website and search by your name and property address.
- Professional: Hire a title company to conduct a full title search. This is often the most accurate and time-saving option, especially if you’re preparing to list your home.
A title search will reveal all existing liens, even ones you might not be aware of, such as leftover claims from previous owners or contractors.
- Verify All Liens and Lien Amounts
Once you know what liens exist, review the details:
- Is the lien valid?
- Is the amount accurate?
- Is the lien even yours, or was it filed in error?
Mistakes can happen, especially with common names as title officers search for these holds using your name, so sometimes multiple matches will pop up. If a lien doesn’t belong to you, work with the title officer to provide proof and get it removed.
- Contact Lien Holders to Negotiate or Settle
For valid liens, reach out to the creditor directly. Your goal is to:
- Confirm the balance due
- Ask if they’ll accept a reduced payoff (especially if you’re facing financial hardship)
- Arrange a payment plan, if needed
This step is crucial. Many lien holders are willing to negotiate, especially if they know you’re actively working to resolve the debt before selling.
- Get a Payoff Letter
Once you’ve agreed to terms with the lien holder, request a payoff statement or demand letter. This official document details exactly how much is owed, to whom, and where payment should be sent.
You’ll provide this letter to your escrow or closing agent later, so they can ensure the lien is paid from the sale proceeds.
- Work With Escrow to Clear the Title
At closing, the escrow agent will use part of the sale proceeds to pay off the lien. This is a common and accepted practice, especially with mortgage or tax liens.
If your equity in the home is enough to cover the lien and remaining costs, the process moves forward smoothly. If not, you may need to negotiate further, bring cash to closing, or explore a short sale option.
- Obtain Lien Release Documentation
After payment is made, the lien holder should provide an official lien release, also called a lien discharge or satisfaction of judgment. This document proves the debt is paid and clears the lien from the public record. Be sure to:
- Request a copy for your records
- Verify the release is filed with the appropriate county office
- Proceed to Close With a Clear Title
Once the lien is satisfied and the title is clean, you can move forward with closing. The buyer’s title company will confirm that all issues are resolved, allowing the sale to proceed without legal risk.
A little upfront effort can save you from major headaches later as well as ensures the buyer gets a home free of legal entanglements.
How to Prevent Liens From Delaying Your Home Sale
Selling your home should be exciting, not stressful. But an unresolved lien can quickly throw a wrench into your plans. It can delay closing, reduce your sale price, or even stop the sale altogether.
The good news? You can stay ahead of the problem. Here’s how to protect your sale and keep everything moving forward smoothly.
Stay On Top of Debts
Liens are usually tied to unpaid debts. These can come from missed tax payments, unpaid contractor work, or court-ordered obligations like child support.
To avoid this:
- Keep your property taxes, mortgage, and utility bills current
- Contact creditors right away if you fall behind—many offer repayment plans
- Stay current on legal obligations to avoid judgment liens
Being proactive keeps your record clean and your sale on track.
Collect Lien Waivers From Contractors
Had any work done on your home? To ensure settled mechanics liens don’t hold up the sale of your home, ask vendors for a release as soon as you make the final payment. The release is like a receipt but more official and it will resolve title issues in the case you want to close before the liens have cleared the system.
Keep Your Records Handy
Even when you’ve done everything right, mistakes happen. Having good documentation can help you clear up an issue fast.
Hold onto:
- Invoices and receipts
- Proof of payment (like canceled checks or transaction confirmations)
- Lien waivers and tax payment receipts
This paperwork can be your strongest defense if a lien shows up in error.
Lean On the Right Experts
You don’t have to do this alone. Experienced professionals can spot red flags early and help you find the best path forward.
- A trusted real estate agent can walk you through disclosures and buyer conversations
- A title officer will flag any lien issues during their search
- A real estate attorney can help you handle complex or disputed liens
Getting expert support early can make all the difference in avoiding delays and closing with confidence.
Final Thoughts
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