Selling a Home? Know About Home Liens

A homeowner may find that lien on their home can pose difficulties when it is time to sell. A home lien often serves as a signal to lenders that a person has not paid off certain bills and can cause an issue for some who need financing for a home renovation. However, home liens do not need to be a permanent situation as a homeowner can take steps to have one or more liens removed.

Address inaccurate home liens and get rid of legitimate liens to make it easier to sell a home. Understand more about home liens and how they can create difficulties when selling a home.

For informational purposes only. Always consult with an attorney or certified tax expert before proceeding with any real estate transaction.

Do You Have a Home Lien?

Homeowners who have received a notice stating that they owe money to one or more creditors may have an involuntary lien placed on their home. Individuals and companies aside from a mortgage lender or the federal government can take steps to place a lien on a home. An example of such a person would be a contractor that has not been paid according to their agreement with a homeowner. Any involuntary lien goes on the public record. Some involuntary liens can include tax liens, mechanics liens and judgment liens. In some cases, credit card debt can become a lien on a home. Those that have not paid their taxes in full may be subject to a tax lien from the IRS. In order to have such liens lifted, any financial obligations must be addressed and paid off.

Those who have financed the purchase of their home will have a voluntary lien on a home. This will be lifted after a loan to a lender has been paid off. A lien on a property due to a primary mortgage only becomes enforced if the homeowner fails to pay back the mortgage loan to their lender. Such a lien is not a concern to potential buyers or a lender, but those that may have occurred because of judgments, unpaid taxes or bills can be a red flag. A new loan, such as a second mortgage or home equity lines of credit, may also be subject to liens. Defaulting on those loans can also lead to foreclosure on a home. Before refinancing a loan, taking out a home improvement loan or listing a home for sale, check to see whether any liens exist and which may need to be removed.

How Can You Address a Home Lien?

A homeowner has options when dealing with a home lien. First off, a legitimate home lien can be paid off. Those without the funds available to pay the full debt may be permitted to settle for a lesser amount with the help of a creditor.

Some home liens are inaccurate. The lien may have already been paid off or may be frivolous. Some claims can also expire. An expired claim or one that has already been paid off will require that a homeowner contacts a particular individual responsible for having it removed from public records. When it comes to a frivolous lien, a homeowner may have to go through with legal actions in order to have it removed from their property.

Depending on the type of home lien, mediation or settling with a creditor are some options that a potential seller can use to remove any liens and have a clear title. Choosing to do nothing about existing home liens, aside from a mortgage on a home, can lead to issues when having to sell a home or attempting to use the equity of a home for a second loan or other purpose.

How Can Buyers and Investors Find Out About Existing Home Liens?

A Hernando home that is encumbered has one or more home liens on it. To find out about liens on a property, a party can request a lien search, go online or go down to the county assessor. Some public records on a property may not have the latest status of the liens. Therefore, a property may appear to have one or more liens on it when that is no longer the case. A lending institution involved in a home buying transaction will want to know whether existing liens have been paid. Their review can make it take longer to sell a home.

What Is a Sure Route to Avoid a Home Lien?

At the end of the day the easiest way to handle the possibility of home liens is to pay bills on time. Those who find that they have to make other payment arrangements due to changing financial circumstances should reach out to their lender, the IRS or the party with whom they owe the debt. Many are willing to work out alternative payment options and help a homeowner avoid the possibility of a home lien.

For informational purposes only. Always consult with a certified tax expert before proceeding with any real estate transaction.