Having a lien on your property is a common problem among sellers when it comes to selling their properties. A sale cannot proceed if there’s an existing lien on the home. So how do you resolve this common issue?
Before anything, let’s define what exactly a lien is. In simple terms, a lienis a legal claim on a property as a consequence of unresolved debt. For example, you had repairs done on your property but you weren’t able to pay the contractors. The contractors will then place a lien on your property. The same thing happens if you fail to pay your taxesor any financial obligation directly concerning your home.Get today’s rates!
How do you know if there’s a lien on your property?
In normal cases, the owner of the home is already aware of these obligations. However, some may take you by surprise. Either these liens are too old that you completely forgot about it, a new one which you haven’t been notified yet, or an overlooked lien that was supposed to be shouldered by the property’s previous owner but wasn’t identified when you bought the home.
The professionals responsible for determining liens are title companies. Their job is to evaluate if you indeed have the right to sell the property before the sale can proceed. The title companies search public records for any existing claims on the home.
So what comes after a lien is found on your home?
If you are already aware of some of the existing claims, you can proceed right ahead to resolving said debts and pay to the debtors. If, however, the title company finds something else, they will contact and inform you about how much is owed and to whom you must pay the debt.Find a lender today!
To clear the title, you must obtain what is called a “release of lien” which is legal proof that you have settled said obligation/s and is therefore cleared for sale.
You can obtain this document from the issuer of the said lien by either of the following ways:
- A proof of debt settlement such as receipts
- If you haven’t paid it yet, pay the determined cost out-of-pocket, or agree with the creditor to pay it at closing using the money from the sale of the property
- If you think the lien is wrong and shouldn’t be charged on you, you may opt to dispute the claim and get the court’s approval to release the document without payment
In cases where a lien is found on your property which is actually the responsibility of the previous owner, the title company can contact the previous owner to order the release of the lien. However, if the debt wasn’t paid or resolved yet, you have two options:
- Go to court to fight the lien since it’s not yours to pay in the first place. Although it’s the fairest thing to do, it can end up costly. In fact, it can cost you more than just paying the debt on your own.
- Pay the debt out-of-pocket. It may seem unfair on your part but it’s the faster and cheaper way to resolve the issue so you can proceed with the sale.
Liens are usually minor hindrances to home selling. Do not let such issues stand in your way. Take the appropriate steps to resolve the issue as soon as possible.Click to See the Latest Mortgage Rates»