Selling a House with Significant Nuisance Liens; What Are Your Options
When preparing to sell your home, it’s the objective of every home seller to sell their home fast and for the highest possible price. Once you manage to get the ideal home buyer and you agree to close the home, there are some issues which may arise and delay the home closing process. One of the common issues is property liens.
If your house has any form of lien, you can still manage to sell your house but you will need to deal with the nuisance lien fast before you can finalize the sale process. Liens affect the title search of a property and this can raise red flags is potential home buyers discovers there is an active lien on the home they are about to buy.
In this post, we are going to look at the meaning of a lien, various types of property liens and what kind of options that home sellers have when selling a house with significant nuisance liens.
What is a nuisance lien?
A lien refers to a legal right that a creditor or lender obtains from a legal court of law allowing them to keep possession of a person’s property if they have any unpaid debts until it’s cleared. As a homeowner, you can get a property lien if you fail to either pay property taxes, mortgage, utility bills or another form of debts from your creditors.
Types of property liens?
There are three main types of liens which are attached to any real estate property. They include;
- Statutory liens
- Judgement liens
- Consensual liens
Statutory liens just as the name suggests originates from the state and federal laws. They are categorized as involuntary liens and they come into force automatically when a property owner does not adhere to their obligations. They include;
- Tax liens- Arises when you have not paid your property taxes which can range from federal income taxes, property taxes or estate property taxes and the IRS places a tax lien against your property.
- Mechanic’s liens- If you had engaged a contractor or a mechanic to work on your property and you fail to pay them, they can place a mechanic’s lien against your house. In such a situation, the home buyer can’t complete the home buying process until the contractor is fully paid.
- Home-buying liens- Also known as mortgage liens, home-buying liens arise when the home seller uses the home as collateral when they were applying for the first mortgage and the lender places a lien on the property until the home seller pays off the mortgage.
Judgement liens arise from lawsuits. A judge can place a judgement lien on a defendant’s property. For instance, if a creditor wins the judgement in a court of law, the judge will put a judgement lien on the debtor’s real estate property.
When there is an existing judgement lien, the judge has the foreclosure powers and the home seller is barred from transferring the property to the new potential home buyer.
Consensual liens are also known as voluntary liens. For any consensual lien to take place, both parties must agree first. Examples of consensual liens include;
- Purchase-money security liens- It happens when a borrower uses credit given by the lender to purchase a property. The property bought is used to secure the credit. Examples of such property purchase-money security liens include; home mortgage, car loans and other properties which can be issued via a credit agreement.
- Non-purchase money security liens- This form of lien is the exact opposite of purchase-money security lien. In this case, the borrower already owns the property in question and they use it as a security to credit or loan. It can be in form of a second mortgage or when refinancing.
What options exist if you are trying to sell a house with significant nuisance liens?
If you want to sell your house and you realize that it has significant nuisance liens on it, there are options that you can explore and still manage to sell your home. If you are in this situation, you can try to fix the problem by;
Understanding the type of liens that are on your property
As we have stated above, there are different types of property liens and as a home seller, it’s only advisable to contact relevant authorities to determine the specific type of lien which has been imposed on your house.
Once you confirm there is an existing nuisance lien, you can contact the lienholder if it’s a party that you know very well and you have not cleared their debts. Engage them and negotiate for a mutual agreement. If it’s an issue to do with a tax lien or manageable debts, you can consider clearing it. Doing so will enable you to fix any outstanding liens as much as possible if the other party agrees to co-operate.
Dispute any illegitimate lien
Not all liens that are placed against your property are genuine. If after realizing there is a lien on your property you researched and found that it was wrongly placed, you can consider challenging it.
Prepare all your documentations and engage the lien holder (either mortgage lender or creditor) with the evidence of debt clearance. If they don’t cooperate, you can engage a real estate lawyer to represent you in a court of law. The court will consider your evidence and submissions and it can rule in your favor hence removing the current lien on your property.
Selling your home “as is” to a home buyer investor through a “handoff” approach
You can also consider selling your house with a lien to a real estate investor. This option makes sense in the event where you agree with the lienholder that they have a right to place a lien on your property but you don’t have the required finances to clear the debt.
Under the handoff approach, the home buyer will by your house “as is”. They will negotiate with the lien holders who can either be lenders and creditors to temporarily lift the lien to guarantee a faster home closing process. Such home buyers will by your house with lien at a reasonable discounted price with a cash offer.
If you are a homeowner in Jacksonville, Florida and you want to sell a house with significant nuisance lien, get in touch with us and we shall help you because remember.