How to Remove a Property Lien Before You Sell Your House
If you’re considering selling your house, you might want to check for liens first.
Removing a lien on a house — or claims filed against the property due to an unpaid debt or bill — can often stall a home sale or prevent it entirely.
To prevent these hiccups, you’d want to first identify the lien and then have it removed before listing the property. Here’s what that means.
What is a property lien?
A property lien is when a creditor lays claim to your home because of some unpaid debt. If you haven’t paid your HOA dues in 10 years, for example, the HOA could issue a lien against your property until you settle the bills.
Liens allow the creditor to claim a portion of your home’s proceeds when it’s sold, refinanced, or foreclosed on. Essentially, it’s a creditor saying, “If you don’t repay what you owe me now, I will use your house to recoup the costs.”
There are a lot of different types of property liens, including:
- Mechanic’s liens, which come from service providers like plumbers and A/C repair workers whose bills have gone unpaid.
- Tax liens, for unpaid property, state, or federal taxes.
- Judgment liens, if you owe someone money due to a legal case against you.
- HOA liens, which stem from unpaid HOA dues.
Liens are a matter of public record and are filed with your county clerk or assessor’s office, so it’s pretty easy to see if you’ve got liens against your property. You might even be able to the search entirely online.
Can you sell a house with a lien on it?
Yes, you can sell a house with a lien on it, but it can be a more complicated process than selling a property without a lien.
It may require the assistance of an attorney or a title company to navigate the legal and financial aspects of the transaction. Additionally, the presence of a lien can affect the marketability of the property and the willingness of potential buyers to purchase it.
Why do liens need to be removed before selling?
A lien on a property is a legal claim against the property that usually arises from unpaid debts, taxes, or judgments. The lienholder has the right to foreclose on the property if the debt is not paid. If you end up finding a lien (or several of them) against your property, you’ll want to have it removed before listing your home.
Leaving the lien on a house in place can make it difficult to sell the home. Though you might find buyers interested at the outset, once a title search is performed, that lien will surface, and unless it’s a very small-balance lien that can be paid off easily, it’s unlikely the buyer will be willing to take that on.
Put simply: Liens are attached to the property, so if you sell a house with one on it, the new owner would then assume that lien. Unless you’re able to find a buyer who’s willing to do that, you’ll likely have an uphill battle selling the home.
How to get a lien off your house before selling
The easiest way to remove a property lien is to repay the debt that spurred it. If you owe a contractor $1,000 in unpaid labor costs or your property taxes are a few years overdue, settle those balances up and then contact the creditor to have them removed.
That last step is important because even once you’ve repaid the debt, there’s no automatic removal of liens. The creditor has to actively withdraw the lien with the county.
In many cases, creditors may be willing to negotiate with you — especially if the debt is a big one. You might consider offering a smaller lump sum than what’s due (some money is better than none, right?)
You can also talk to a title agent for more advice. They deal with liens and other title issues daily, and they can help guide you on working with creditors, removing liens, or even selling a property with a lien still on it.
A quick note here: If you think a lien that’s been filed against your property is unwarranted, contact an attorney. They can help you dispute the lien and clear your home’s title.
How much does it cost to remove a lien on property?
The cost of removing a lien on a property can vary depending on a few factors, such as:
- the type of lien
- the location of the property
- the complexity of the situation
However, some general guidelines can help you estimate the cost of removing a lien on your property.
Attorney fees to help you remove the lien
The cost of hiring an attorney can vary depending on their experience, location, and the complexity of the case.
The average cost of hiring an attorney to remove a lien is around $1,000 to $2,500. However, this cost can be higher if the case is more complex or if the lien is a federal tax lien.
Filing fees and other related costs
In addition to the attorney’s fees, you may also have to pay filing fees and other related costs. The filing fees can vary depending on the court or agency that is handling the lien.
For example, if the lien is a federal tax lien, you may have to pay a fee to file a Certificate of Release of Federal Tax Lien with the county recorder’s office. The cost of filing this document can range from $5 to $20.
If the lien is a mortgage lien, you may have to pay a reconveyance fee to the lender to release the lien. This fee can range from $100 to $300. You may also have to pay a recording fee to record the lien release document with the county recorder’s office. This fee can range from $10 to $50.
Other pro-tips regarding property liens
As with most things, the best defense is a good offense here. Stay on top of your bills and settle up overdue accounts before a creditor can file a lien. If you’re unsure about where your accounts stand, pull your credit report at AnnualCreditReport.com for the full breakdown.
If you do decide to sell a home with an intact property lien, be upfront with your real estate agent about it. This will help them better market your property (most likely “as-is”) and find suitable buyers for it (often investors who are more experienced in these matters).
The bottom line
A property lien doesn’t mean you can’t sell your home, but it does require addressing first.
If you’re considering selling your house, check with your county clerk’s office and see if there are liens against your property. If there are, try to settle the debt and have the lien removed before listing the home. If that’s not possible, a title agent, attorney, or real estate agent may be able to help.