Can You Sell A House With A Lien? Here’s What You Need To Know

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Can You Sell A House With A Lien Here's What You Need To Know

You may have a lien on your house because of an unpaid tax bill, contractor, or divorce judgment. Selling a home is challenging, and the process becomes more complicated when you sell a house with a lien.

You don’t need to worry if you’re selling your house with a lien. In most cases, you can pay the lien off by selling your home. Selling your home with a lien allows you to pay your debt with no out-of-pocket expenses.

This guide will answer your questions about selling your house with a lien and provide tips for navigating the process.

What is a lien, and what does it mean to have a lien?

A lien is a claim or legal right against your assets in which your assets are collateral to satisfy a debt. Liens are publicly available information and are visible to your potential buyers.

A lien can be voluntary or involuntary. For example, a mortgage is a voluntary lien in which you agree to have a lien recorded against your real property as collateral for a loan. An involuntary lien may occur when a creditor records the lien with the county clerk or when you lose a judgment for nonpayment of debt.

Different types of liens

Tax lien: The government can record a tax lien if you owe back taxes on your property. If you want to remove a tax lien, you’ll need to pay the debt or hire an attorney to negotiate.

Tax liens usually have the highest priority, even higher than your primary mortgage lien. As a result, most mortgage lenders include property taxes in payments and pay the property tax through an escrow account. Having tax in the mortgage payment protects the lender’s interest in the property and helps them maintain their primary position.

Who can file a tax lien?
The federal government can file an federal tax lien or an IRS lien for back income taxes, and unpaid taxes can result in foreclosure.
State and local governments can record liens for delinquent state or local taxes.

Mortgage: A mortgage is the most common type of property lien. There are two levels of mortgage liens: primary and secondary:
Primary lien: This is your mortgage, and the lender wants the primary priority lien. That means if you default and have to sell your house in bankruptcy or foreclosure, you’ll pay the lender first.
Secondary lien: This is usually a home equity loan. Suppose you’ve already taken out a mortgage and want to borrow against the equity you’ve built. In that case, you can apply for a home equity loan. This type of lien has a secondary priority.

Child support or alimony lien
When a property owner does not pay court-ordered child support or alimony, a judge may place a lien against the property. The judge may allow a home sale, but court proceedings can bog it down.

Construction lien
This lien also called a mechanic’s lien, occurs when a property owner has yet to pay for construction work after 90 days.

HOA lien: A homeowner association can record a lien if you fail to pay dues or have unpaid fines. HOAs might even have the power to start foreclosure proceedings on your home if the local laws and regulations allow it.

Judgment lien
Judgment liens occur when a judge issues a judgment against a property owner defendant who loses a lawsuit. A lien is a payment for court-ordered damages, and a home sale must be court-approved.

A young couple of homeowners argue with their county clerk about a lien on their house

Figure Out if the Liens are Valid

You may not even be aware of a lien on your property. Since liens are public information, you can verify their existence and validity. Some liens have a statute of limitations and can expire. A lien that has exceeded the statute of limitations or expired is invalid.

To determine if your lien is valid, go to the county clerk or county recorder’s office and request your property’s public records. Other people you may get in contact with include the county recorder or recorder of deeds.

How long does a lien last, and how do they work?

The length of a lien depends on the type of lien. The only way to remove the lien is by satisfying the lien requirements and securing a lien release.

The lien release is a document that indicates you have fulfilled your obligation, and you need to file the release so that the lien no longer appears in the public record.

Can you sell a house with a lien in it?

Yes, you can sell a house with a lien. But you must clear the property’s title before your buyer can take possession. In other words, you must fulfill all lien obligations on the home.

Typically, your creditor will record a lien with your local county clerk. That lien protects the creditor’s interest and informs the public that the creditor has an interest in your property.

As part of the home sale process, title companies perform a title search. The search will reveal any liens recorded against your property. For the deal to occur, the title company will ensure that any lien against your property is paid so your home’s title is free and clear. Once the title is free and clear, the buyer can take possession of the title.

How can I sell a house with a lien in it?

Selling a house with a lien is generally not too complicated. Usually, you can pay the debt and continue with a home sale.

What if you can’t pay the debt out-of-pocket? That’s okay; you can negotiate with the buyer to fold in the lien cost as part of your closing costs. That means you’ll have to deduct the cost of the lien from your total sales price.

You can remove a property lien by paying the debt or negotiating with creditors. Your creditors may accept a reduced payoff amount.

When selling your home with a lien, you have the following options available to you: 

  • Pay the lien
  • Dispute the lien
  • Negotiate the amount of debt
  • Use the proceeds of the sale to settle the lien
  • Sell your to a cash buyer

Pay the lien

If your financial situation allows it, the easiest option is to pay the debt. You might consider a payment plan if you cannot pay the amount in full. That makes the title free and clear and will not delay a home sale.

If you pay your creditors, get proof that you’ve spent with a lien release. Your creditor, or lienholder, is legally obligated to provide you with a document that states you have paid the debt and the lien is lifted.

This document is often called a:
Lien discharge
Lien termination
Satisfaction of mortgage

A young couple of homeowners talk with their lawyer about selling a house with lien on it that they own

Dispute the lien

If you’ve paid the lien, or you think that the lien is more than you owe, you can hire a lawyer to argue against the lien.

Negotiate the amount of debt

Suppose you have $50,000 equity in your home, but you owe a creditor $60,000. In that situation, you don’t have enough equity in your home to satisfy the debt. Consider hiring an attorney to negotiate on your behalf.

In any event, you should get a payoff letter from your creditor(s). A payoff letter tells you exactly how much money you owe. It’s a vital document if you decide to fold your debt into a home sale.

Use the sale proceeds to settle the lien

You can add the debt to the house sale. You’ll need to get a payoff letter and give the letter to your escrow agent. They’ll handle it from there.

Two homeowners sign the sale of their house to a cash buyer

Sell your house to a cash buyer

It may be possible to sell your house with a lien to a cash buyer. In some municipalities, you can sell your home with a lien. When you sell your home, the lien remains with the property, and if the cash buyer wants a clear title, they will need to handle the lien.

If you want to sell your house for cash, consider We Buy Houses For Cash to: 

  • Receive a fair, no-obligation offer
  • Sell your home in as few as two weeks
  • Sell your house as-is without the hassles and expense of repairs or real estate agent commissions


The home selling process is complex and can be a hassle. Selling your home with a lien makes the process longer, more complicated, and more confusing.

That doesn’t mean that selling your house with a lien is impossible. You have options, including:

  • Search for liens against your property
  • Determine if liens are valid
  • If possible or practical, pay the lien amount
  • If you have a reason, dispute the lien 
  • Negotiate the lien amount
  • Use the sale proceeds to settle the lien
  • Sell your home to a cash buyer

Sometimes, selling a home with a lien on it is especially challenging. In that case, you may decide that selling your home “as-is” is your best option.

Selling your home “as-is” enables you to pay off your debt and avoid the hassle and expense of dealing with repairs and other costs associated with the home-selling process.

The process can be complicated, so it’s a good idea to work with professionals who have experience with dealing with homes encumbered by a lien.

We Buy House For Cash can help.

We will assist you in selling your home fast and at a fair price. You can avoid the problems of selling a house with a lien with a real estate agent or on your own. Our local experts will walk you through the entire process and help you so you’re not alone.

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