So, you’ve decided to sell your home, and perhaps have gotten far enough into the process that you’ve actually found the right buyer for your house. Maybe you’re ready to simply sell the house and move on. But before the sale can be finalized, you discover that there is a lien on your home. You may be shocked and understandably confused. A lot of people don’t even understand what liens are, after all.
A lien is essentially taken out on a property when the property owner has failed to pay debts of some kind. These debts could include unpaid municipal utility bills, in which case the homeowner may first receive municipal utility letters before the lien is taken out. A lien could also be taken out on a property when a homeowner fails to pay a contractor. No matter what, a homeowner typically cannot sell a property until the lien is settled. But how does that work? And what can you do to ensure that your home is sold as quickly as possible?
How Is a Lien Discovered?
An individual selling a property may not even know about a lien that was taken out on their property until the sale is beginning to go through. However, if you received municipal utility letters prior to the sale, you may have had an idea about the issue beforehand. A lien is often discovered when a title company conducts a lien search to verify whether or not the homeowner has the legal right to sell the property. This is especially important for first-time homebuyers; and with 25% of all Floridian home buyers in 2019 being first-time buyers, these are more common than you might think.
The lien search will essentially involve sifting through public records for liens. A lien essentially verifies that if the property is sold, another party will have a right to a portion of the proceeds due to the debts involved.
How Can Homeowners Be Unaware of Liens?
Being made aware of a lien taken out on your property during a sale can be embarrassing and even shocking. Some buyers don’t believe that sellers could possibly be ignorant of liens on their properties, but it’s more likely than they imagine. Some liens are so old that homeowners genuinely forget about them. This is especially true if the liens involve their property tax history, as they won’t necessarily have reminders about old unpaid taxes the way they would have municipal utility letters regarding unpaid utility bills.
Conversely, a lien may be quite recent. Some homeowners sell their houses to avoid foreclosure but fail to realize that their neglected debts or real estate taxes may come back to haunt them. Additionally, some liens were the responsibility of the previous homeowner. If you failed to conduct a lien search when buying your home, you essentially could have inherited the lien put on your house.
What Happens If I Have a Lien On My House?
As previously mentioned, you will not be able to sell your house until your debts are settled. The title company will let you know about the lien on your house, and then explain who you need to pay in order to have the lien removed. If you have municipal utility letters available, this may be fairly straightforward. Otherwise, there may be some hunting involved, especially if individual contractors need to be paid.
If there was no debt owed or the debt was already paid, you need to provide proof in the form of receipts. Those that do not have the money to pay the lien can potentially negotiate to do so with the proceeds from the sale of the house. Otherwise, the lien can be disputed, and some homeowners can actually have the lien removed without payment based on a court decision in their favor.
Although a lien can understandably be incredibly frustrating, it needs to be removed in order for you to move on with the sale of your home. If a lien was unfairly placed on your property, there are options available. Just make sure that you are fully aware of your rights as a homeowner.