If you fail to pay a bill, a company or government can place a lien on your property. You might have a lien related to an outstanding bill from a contractor for work that you had done on your house, or you might owe money to your homeowners association for dues you didn’t pay or a fee that you were assessed for violating a rule. You also might have a lien for unpaid taxes.
A lien can make things complicated if you decide to sell your home. Before buying your house, a buyer will have a title search conducted to check for any liens against the property. If a lien is found, that can delay closing or cause a deal to fall through completely. There are several ways to handle a lien, depending on the circumstances.
Take Care of the Lien Before Closing
Sometimes a homeowner pays off a bill, but a lien isn’t removed from the property for some reason. If a title search finds a lien related to a bill that you have already paid, contact the company or government agency and provide proof of payment so you can have the lien removed.
If you do owe the money, the simplest way to handle the lien is to pay it off before closing. If you can’t pay the entire bill, you might be able to negotiate and have the amount that you owe reduced to a sum that you can afford to pay. Get help with negotiations from an experienced real estate attorney or a certified public accountant.
Handle the Lien at Closing
If you expect to get enough profit from the sale of your house to cover the lien, you might be able to pay off the outstanding bill at closing. That will reduce your profit, but you’ll be able to sell your house and the buyer will be able to assume ownership of a property with a clear title.
Under some circumstances, a lien can be transferred. If you own another piece of property, you might be able to transfer the lien on the house that you’re selling to your other property. That will let the buyer purchase the house with a clear title and allow you to pay off the amount you owe at a later date.
Get Professional Help Dealing With a Lien
A lien on your property can complicate closing. It’s in your best interest to pay off any outstanding bills as soon as possible so you won’t have to worry about a problem later. If you can’t pay the amount you owe, consult an attorney and/or CPA to discuss your options and get help resolving the situation.
