When you’re preparing to sell your home, there are several factors that can impact the speed and success of your transaction. One of the most significant—and sometimes overlooked—issues is the presence of a lien on your property. Liens can complicate or even halt the home-selling process if not addressed properly. Whether it’s a tax lien, contractor lien, or mortgage lien, understanding how they affect your sale and how to remove them is critical to a smooth closing.
At Secure Title Company, we know the ins and outs of dealing with liens during real estate closings, and we’re here to guide you through the process.
What Is a Lien?
A lien is a legal claim or right against a property by a creditor who is owed money. It essentially acts as a red flag that prevents the property owner from selling or refinancing the home until the debt is settled.
Liens can arise from various financial obligations, including:
- Unpaid taxes
- Unsettled mortgage balances
- Court judgments
- Unpaid contractor or mechanic bills
- Child support or alimony arrears
These claims become public record and must be cleared before the property title can be transferred to a new buyer.
How Liens Impact a Home Sale?
Liens can be a serious obstacle in the home-selling process. If a lien shows up during the title search—a standard step in all real estate closings—it can delay or even cancel the transaction until the issue is resolved.
Here are some of the main ways liens affect your ability to sell:
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Buyer Concerns: Buyers are unlikely to proceed with a purchase until all title issues are resolved.
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Financing Problems: Lenders typically will not approve mortgages for properties with unsettled liens.
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Closing Delays: The sale cannot move forward until the lien is either paid off or legally removed.
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Reduced Negotiating Power: You may be forced to lower your sale price to account for the cost of resolving the lien.
Even if a buyer is still interested, liens complicate negotiations and can affect their timeline and trust in the transaction.
Common Types of Property Liens
Understanding the different kinds of liens can help you determine the best approach for resolution.
1. Mortgage Liens
These are the most common and are tied to the home loan you used to purchase the property. They are typically resolved at closing using the buyer’s payment.
2. Tax Liens
Issued by federal, state, or local tax authorities, tax liens occur when you owe unpaid property or income taxes. These liens take precedence over other claims and must be settled immediately.
3. Judgment Liens
A court may place a lien on your property if you lose a lawsuit and owe a debt. These liens are enforceable until the debt is paid or the lien expires.
4. Mechanic’s or Contractor Liens
If a contractor or supplier performs work or supplies materials but isn’t paid, they can file a lien against your property.
How to Find Out If Your Home Has a Lien
Before listing your home, it’s wise to conduct a title search. This process, often handled by a title company like Secure Title Company, will reveal any existing liens or claims against the property.
Some signs you might have a lien on your home include:
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Receiving legal notices or letters from creditors
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Past due tax bills or utility payments
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Disputes with contractors or service providers
A thorough title search can uncover both active and historical liens and help you take the next steps toward resolving them.
Steps to Remove a Lien Before Selling
If you discover a lien on your property, don’t panic. There are several ways to remove it, depending on the type of lien and the nature of the debt.
Here’s what you can do:
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Pay Off the Debt: The most straightforward method. Once the debt is paid, the creditor will issue a release of lien.
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Negotiate a Settlement: In some cases, creditors may accept a reduced amount to release the lien.
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Dispute the Lien: If the lien is invalid or was filed in error, you can contest it in court.
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Request a Lien Subordination: For multiple liens, you might negotiate the priority of claims to allow the sale to proceed.
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Use Sale Proceeds to Pay the Lien: You can work with the title company to pay off the lien from the closing funds.
Keep in mind that the release must be filed with the appropriate county records office. This official step confirms the lien has been cleared and the title is clean.
Why You Need a Title Company’s Help
Liens are legal matters that require careful documentation and follow-up. Handling them on your own can lead to missed deadlines, incorrect filings, or disputes with buyers.
That’s where Secure Title Company comes in. Our experienced team manages all aspects of title research and closing coordination. We help you:
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Conduct a full title search
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Identify all liens and encumbrances
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Work with creditors to remove or resolve claims
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Ensure legal filings are recorded accurately
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Facilitate a smooth and timely closing
By working with a trusted title company, you’re protecting both your legal interests and your ability to sell without complications.
Preventing Liens in the Future
Whether you’re planning to buy another home or hold onto your current one, it’s smart to take steps to avoid future liens.
Tips for Avoiding Property Liens:
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Pay taxes and property-related bills on time.
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Resolve any disputes with contractors in writing.
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Keep detailed financial and legal records.
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Monitor your credit and public records regularly.
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Work with licensed professionals for repairs and services.
Being proactive with your finances and property management can save you a lot of time and money when it’s time to sell again.
Final Thoughts
Liens don’t have to derail your home sale. With the right knowledge, resources, and expert support, you can resolve these issues and close the deal confidently. Whether it’s a small contractor lien or a major tax issue, dealing with it upfront is key to ensuring a seamless transaction.
If you’re concerned about liens affecting your upcoming sale, Secure Title Company is here to help. From title searches to resolving complex claims, we offer comprehensive support throughout your real estate closings process.
Contact Us
Secure Title Company
📞 Phone: (701) 660-5887
📧 Email: info@securetitlecompany.com
Let us help make your closing process as smooth and secure as possible. Reach out today for trusted guidance and expert support.