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Selling a home is complicated, and a home with a lien on it can complicate the transaction even further. Liens on homes are actually very common, and they don’t necessarily keep you from selling. But certain types are more — or less — problematic than others. Here’s what to know about selling a house with a lien on it.

What is a lien?

A lien on your home is a legal claim to your property by an individual or entity you’re indebted to. Liens are commonly used in collateralized debt arrangements. If you default on your mortgage and the lender forecloses, any party with a lien on the property might be entitled to some of the sale proceeds as a means of repayment.

There are two basic kinds of property liens, and one is far more worrisome than the other: voluntary and involuntary. As the name implies, a voluntary lien is one you sign up for — a good example is your mortgage, which is technically a lien but one you knowingly secured. An involuntary lien, however, is typically placed in scenarios where you owe money, and the entity who is owed, whether it’s a contractor or a tax collector, is attempting to collect what is legally owed to them.

Types of property liens

Various entities can legally place a lien on your home if you owe them money. This could be government agencies due to unpaid property taxes, credit card companies, other lenders for unsettled debts like medical bills or personal loans or contractors for non-payment of their services. Here are the kinds to know about:

• Mortgage: A bank or mortgage lender places a lien on any property they authorize a mortgage for. This is a voluntary lien — the homeowner owes them money due to the mortgage loan, but it’s not an indication of delinquency or wrongdoing.
• Tax lien: If you fail to pay taxes (including local property taxes), the government can put a lien on your home. This is an involuntary lien.
• General judgment lien: Another involuntary version — a creditor can choose to file for a judgment lien in court if you fail to pay what you owe them.
• Contractor’s lien: Also called a mechanic’s lien, this is another involuntary form. A construction company, contractor or builder can file a contractor’s lien if you fail to pay them for work they performed.

Can you sell a house with a lien on it?

The short answer is yes. Especially if it’s voluntary: Selling a home with a mortgage on it, for example, is very common. That’s because you’ll (ideally) be able to use the proceeds from the sale to pay off your loan balance and satisfy that debt.

The issues arise when it’s an involuntary lien. Tax liens will almost certainly have to be paid off before the home can be sold. In some cases, the buyer might agree to help: It’s possible to sell a home with a judgment lien, for example, but if you can’t resolve the lien yourself, your buyer would have to agree to pay it. This isn’t common, but it does happen with certain types of sales, such as homes sold through foreclosure auction. You can also take legal action to have the lien dismissed, though this option might prove too expensive if you already owe more money than you can pay back.

At the end of the day, it’s simplest to avoid selling your home if it has an involuntary lien, if possible. Wait to sell until you can clear things up — or, if you need or want to try anyway, it’s smart to have guidance from an experienced real estate attorney.

How do I find out if there are any liens against my property?

If the property is your primary residence, it’s unlikely to have any liens against it that you don’t know about. However, there are several routes you can take to check:

• Government records: You could examine local government records via your county recorder or assessor, or at the local courthouse. Bear in mind that this might require paying a fee.
• Credit report: Check your credit report — these often list liens in the public records section.
• Title search: Employing the services of a title search company is the most comprehensive method, but it’s also likely to be the most costly. These firms offer a full rundown of your property’s title history and pinpoint any burdens, ensuring any liens are identified before selling or transferring the property. A title search is a standard step in any real estate transaction.

FAQs

• Is it bad to have a lien on your house?

  A voluntary lien, such as your mortgage, isn’t considered bad, so long as you continue to repay it on schedule. Involuntary liens on a home, though, can present a serious challenge if you want to sell the property. To avoid headaches, involuntary liens like contractor’s, judgment and tax liens should be resolved as soon as possible.

• How long does a lien stay on your property?

  In some cases, liens do expire. The laws are complex and differ in each state, though. A real estate lawyer can help you determine if any liens on your home have expired.

• Can a lien on my home stop the sale?

  While it’s possible to sell your home with an involuntary lien on it, the buyer would need to agree upfront to take on, and pay back, the debt. In most home sales, a title search is performed, which would reveal any liens on the property — if the buyer does not find out there’s an involuntary lien on the home until this point, then yes, it might cause the sale to fall through.

• How can I prevent a lien on my home?

  You can prevent an involuntary lien on your home by paying what you owe. For example, you could have a lien placed on your home for failing to pay property taxes or someone who did renovations — if these debts are paid in full, or according to an agreed-upon schedule, that prevents a lien from being put in place.