Fair Sale Homes provides this information as a resource to help home owners like you asking, “how do I sell my house with a lien” or “can I sell my house with a lien” in Los Angeles, CA. We share our knowledge and experience based on consistently dealing with liens and problem situations for home sellers in CA. We are not attorneys and this content on liens is not meant to represent legal advice.
Can I Sell My House With A Lien?
If you are stressing that a lien is a roadblock to selling your house in Los Angeles, you can relax and consider that many liens are hurdles that can actually be removed and are not unsolveable obstacles to a successful sale of a property. It is very common to resolve liens in order to successfully sell your house in California. So yes, you can sell a house with a lien. Successfully doing so involves knowing what liens exist against your property and taking steps to pay of the liens (more on ways to do that below, regardless of your financial situation).
What is a Lien?
A lien is a monetary claim against a property to ensure payment. It gives a creditor the right to seize the property as collateral for an unmet obligation, usually an unpaid debt. The creditor can then sell the property to recoup at least a portion of their loan.
Research a Property’s Liens
Liens are public records in CA. Therefore, anyone who wants to check for liens recorded in the state can contact or visit the relevant government office. For real estate liens, a resident can go to the county clerk/recorder’s office in the county where the property is situated to request a title deed search
Pay Title Company to Run Chain of Title
To make it even easier, search Google for a local title company. For between $100 to $250, they can provide you a chain of title report. As part of the title search, the chain of title is researched to verify ownership, identify liens (a legal claim on assets which allows the holder to obtain access to property if debts are not paid – more on that later) and make sure judgments and taxes have been settled. A chain of title outlines the history of ownership of a piece of property such as real estate, vehicles, or other assets. It is sequential in nature, going from the very first owner all the way up to the current owner. Keeping accurate title records helps establish ownership of property or an asset.
Common Types of Property Liens
Now that you understand the basics, we can give you a quick overview of different types of property liens.
- Mortgage Lien. Mortgage liens are levied for the debt accepted to buy a home. Mortgage liens are specific to the subject property and are voluntary.
- Judgment Lien. Judgment liens can be levied by a court when someone fails to repay a debt. Judgment liens are general, and can be either voluntary (if the homeowner chooses to use their property as collateral for the debt) or involuntary (if the court orders the lien against their wishes).
- Estate Tax Lien. When estate taxes are not paid on property that is passed down after death, the government can issue a general, involuntary estate tax lien. Please read more about estate taxes at Smart Assets.
- Corporate Franchise Tax Lien. States with a corporate franchise tax charge business owners for the right to operate in the state. Failure to pay this tax can result in a general, involuntary corporate franchise tax lien. Please review how a lien affects you and how to release a lien with the California Franchise Tax Board.
- Federal Tax Lien. The federal government can place a general, involuntary federal tax lien against citizens who fail to pay income taxes. A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. Please review here for how to get rid of a lien at the Internal Revenue Service.
- Mechanic’s Lien. If a homeowner fails to pay someone who did renovations or remodeling, the unpaid workers or suppliers can take a specific, involuntary mechanic’s lien against the property. Please review here to learn more about mechanic liens at the California Department of Consumer Affairs.
- Municipal Utility Lien. Failure to pay municipal utilities, like water and electricity, can result in a specific, involuntary municipal utility lien against the property.
Options To Sell My House With A Lien
Depending on the seller’s financial situation and available cash in pocket, there are a few different options to sell a house with a lien in Los Angeles.
Option 1: If you are able to pay off the lien before selling…
If you the seller have the cash on hand and are able to pay off your lien before starting the process of selling the house, this is ideal. Just make sure to keep the paperwork proving the release of the property lien. Especially for liens that a few hundred dollars or low thousand dollars to pay off, it makes the most sense to do the work upfront to clear the lien from the title. This will reduce any surprises to potential buyers and not turn them off.
Option 2: If you are unable to pay off the lien before selling, then start the sales process and use your equity to cover the lien during the selling process (in escrow)
As a result of finding a buyer and eventually having a successful sales transaction where a buyer is paying all cash, those funds will be used to pay off the lien. In other words, the lien payoff is coming from the buyer funds, but subtracted out of the seller’s profits. Upfront, simply run a calculation to estimate what your equity is. Then, subtract from the equity the agent commissions and closing costs. At the closing of the sale, using all funds collected, the escrow company pays the seller’s loans, liens, and vendor bills approved by buyer and seller.
The highest probability of success with this option is if the buyer is a direct buyer using all cash to purchase the property.
Option 3: If you are unable to pay off the lien before.. and you don’t have enough equity to cover the lien, then
You will have some challenges making a sale happen, but it is still possible. Fair Sale Homes can help you figure out a path to sell your house which includes the following services: negotiating with the lienholder/lender or disputing the lien if it is not legitimate.
Explore Your Options with Fair Sale Homes
Regardless of which option you choose, feel free to contact us to help you navigate your situation. Fair Sale Homes, a direct buyer of homes and apartments, is able to attain incredible results for our clients. We will not try to pressure you into a solution that does not align with your goals. Instead, we will help you take an objective look at your selling options so that you can choose the one that is best for you. If you selling real estate in Los Angeles, Fair Sale Homes would love to help you achieve the best outcome possible.
Are you thinking about buying or selling a home in Los Angeles? Fair Sale Homes is actively helping buyers and sellers in Los Angeles. Reach out to Fair Sale Homes to learn more about the various options available to you. There is never any cost, hassle, or obligation to work together. We are happy to answer any questions you have about buying or selling real estate in Los Angeles whether or not you choose to work with our team! (626) 863-7006
WE BUY HOMES across cities Southern California. A sample of cities where we buy homes for cash: East Los Angeles, Lincoln Heights, Silver Lake, Atwater Village, Van Nuys, Northridge, Pacoima, Panorama City, Harbor City, and Wilmington. Also, we buy apartments in Los Angeles, CA. Whether you are experiencing home foreclosure, code violation, failed property sale, or simply have an unwanted property, we will work with you to find a solution.