Selling a House With a Lien in Knoxville, TN
If your house has a lien, it doesn't mean you can't sell your house. But you will need to address the lien(s) before doing so. When selling a house with a lien, there are typically a few options: you can pay back what you owe out of pocket, negotiate with the lienholder to pay off the lien at a discount, wait for the lien to expire, or sell your home as-is with a home buyer and address the lien(s) at closing.
With over 18 years of experience, our home buyers in Knoxville, TN are here to answer your questions about selling a house with a lien.
Can You Sell a House With a Lien?
Yes, you can sell a house with a lien on it. However, when there's a lien on a property, the process is easier said than done. Here's what you need to know about property liens and selling a house that has one or more liens on it.
What Is a Lien?
A lien is a claim made on a property for a lender or creditor (credit card companies, contractors, government agencies, etc.) to recoup what they are owed. In most cases, liens are placed to prevent the sale of a home until a debt is paid in full. However, some lenders may attempt to take ownership of a property to pay off the debt (i.e. foreclosure).
A lien is filed by placing a notice in the Register of Deeds in the county where the property is located. Some liens such as judgements and tax liens are general, which means they attach to a person and therefore attach to everything that they own in that county. Other types of liens such as UCC liens, HOA liens, and mortgages are property-specific, meaning they're tied to one or more specific properties.
In short, when a property is sold, refinanced, or foreclosed, a lien ensures the funds will be used to pay back the lender or creditor before the owner.
What Is a Property Lien?
A property lien is placed on assets that can be taken as compensation if debts are not paid. These liens make it considerably harder to sell a property.
Creditors can file several types of liens on a house, including:
- Judgements - When a debt is not paid, the creditor may file a civil suit against the borrower. If the creditor wins the civil suit, they are awarded a judgement against the borrower. This judgment can then be filed at the Register of Deeds and become a lien against any property held by the borrower in that county.
- UCC liens - Uniform Commercial Code (UCC) liens are for business assets that are financed. In residential real estate, a UCC is typically filed to finance an upgrade to a property such as a new HVAC unit or roof.
- Tax liens - A tax lien is a government claim against assets, including homes. Tax liens can be imposed for unpaid taxes owed on a property or not paying income taxes.
- HOA (Homeowners Association) liens - If you're a member of a homeowners association and fall behind on monthly dues, the association can place a lien on your property.
- Mortgage liens - A mortgage lien is placed against a homeowner's property when the owner signs a deed of trust to borrow money against a specific property.
If a house has multiple liens, they are paid according to each lien's priority. In general, priority is established when the lien is recorded at the Register of Deeds, with the earliest lien being of highest priority.
If the total dollar value of liens is greater than the purchase price of the property, then some lienholders may have to accept less than the face value of their lien for the property to be sold (or the seller will have to pay them in full out of pocket).
How Do I Find Liens on My Property?
Liens are public record, which means they're accessed through the Register of Deeds office for each county. Some counties have public online access (Anderson County, TN), several do not offer public online access (Blount County, TN), and the rest offer online access on a subscription basis.
It is possible to call or visit the Register of Deeds office and research this yourself. You will need the name of the owner, the property address, and the county where the property is located. Alternatively, you can also pay a title company or real estate attorney to search for liens on your home.
Do Liens Expire?
Yes, but it depends on the type of lien. Judgements, Tax liens, and HOA liens in Tennessee expire after ten years. UCC liens expire after five years. Mortgage liens expire ten years after the expiration date listed on the lien.
Liens can also be renewed before they expire. Or, if the lien has already expired, creditors can refile to extend it.
What to Do if Your House Has a Lien
1. Pay the Lien In Full
If you want to sell a house, you'll need to address any liens that are against the property. One strategy is to accept all of the liens on the property and pay them off in full. To do this, you will need to contact the lienholder(s) and request a payoff with a good through date.
As some liens consistently accrue interest, the good through date will let the payer/closing company know how long that the payoff is valid. Then, these liens can be paid out of pocket or paid off at closing.
2. Negotiate With Lienholders
Depending on the circumstances, some lienholders may be willing to accept less than what is owed on the lien. For example, if you have an overleveraged property or a property facing foreclosure, some lienholders may be approached and offered something now rather than the potential for never receiving repayment.
The willingness of the lienholder to negotiate will depend on the lienholder, the type of lien, and the lien's priority relative to other liens. As a result, this strategy may or may not work out.
3. Allow Liens to Expire
One strategy is to wait it out. If you have lived with the lien for a long period of time, it may be advantageous to continue to wait until the lien expires.
As stated above, liens typically expire in five to ten years so it is possible to own a property long enough for the lien to go away. This strategy is risky as it locks up your property for a potentially long period of time and the lien may be extended when the expiration date approaches.
4. Sell Your House To Experienced Home Buyer
Retail buyers will want all of a seller's loans and liens to be paid off at closing so that they can receive title insurance on their property.
Most real estate agents and retail buyers are not interested or able to assist a seller with liens on a property. However, an experienced home buyer can research a property prior to the sale to determine if any obvious liens are attached to the property and provide a strategy for how to address them, including paying them off liens at closing, negotiating for a lower payoff, or transferring the property and allowing the liens to expire.
This process enables you to address the debts in a cost-effective manner, while eliminating the need for repairs, inspection fees, and closing costs.
Why Sell to Reliant Home Buyers of TN?
Need to sell fast to pay off liens? Reliant Home Buyers of TN has the ability and experience to provide you with an effective strategy for dealing with property liens.
First, we have access to all available online county Register of Deeds sites in Tennessee (and can go in person for the ones that aren't online). We also have the experience to identify obvious title issues that require repayment. If you choose to work with us, we will provide you with a copy of the lien and then provide a strategy for addressing the lien based on our nearly two decades of experience.
Regardless of the condition or price range, we buy inherited property, pre-foreclosed homes, and houses that need broad repairs throughout East Tennessee. We can help you sell your home fast and avoid the process of listing. Plus, you won't have to face liens and title matters alone!
This way, you'll get to sell your house quickly and (hopefully!) free yourself of liens on your property.
We Buy Houses With Liens in Knoxville, TN
Reliant Home Buyers of TN buys houses in Knoxville, TN and surrounding areas, including Blount, Knox, Loudon, Cumberland, Monroe, McMinn, Hamblen, and Anderson counties. Contact us at 865-567-6391 to find out what makes us the best option for selling your house with liens today!