Can You Sell a Property With a Lien? Everything You Should Know

Finding out there's a lien on your property right when you're ready to sell can feel like hitting a wall. But here's the thing: millions of homes with liens sell every year, including almost every home with a mortgage.

A lien is simply a legal claim against your property that secures a debt, and it doesn't have to derail your plans. We'll walk through the different types of liens, how to discover what's on your title, and the step-by-step process to sell your home and move forward.

Can you sell a house with a lien on it

Yes, you can sell a house with a lien on it. The lien gets paid off at closing using the proceeds from your sale, and the buyer receives a clear title. This happens every day with mortgages, which are technically liens, and it works the same way with other types of liens, too.

The distinction that matters most is whether the lien is voluntary or involuntary:

• Voluntary liens: Debts you agreed to, like a mortgage or home equity loan. Routine and handled at closing without complications.

• Involuntary liens: Claims placed on your property without your consent, like unpaid taxes, contractor disputes, or court judgments. They require extra steps but don't block a sale.

Buyers and their lenders will discover any liens during the title search, so being upfront about them from the start keeps your transaction moving smoothly.

What is a lien on a house

A lien is a legal claim against your property that gives a creditor the right to collect what you owe. Think of it as a security interest: the creditor can't take your house right away, but the debt attaches to the property itself rather than just to you as a person.

This is why liens affect the sale process. The lien follows the property, not the owner. If you sold your home without resolving the lien, the new owner would inherit that debt. Title companies and lenders require liens to be cleared before closing for exactly this reason.

Types of property liens

Liens fall into two broad categories: voluntary and involuntary. Knowing which type you're dealing with helps you figure out your next steps.

Mortgage liens

This is the most common lien type. You agreed to it when you financed your home, and your mortgage lender holds the lien until you pay off the loan.

At closing, the title company uses your sale proceeds to pay the lender, releases the lien, and sends you the remaining funds. It's straightforward and happens with most home sales.

Tax liens

The IRS or your local government can place a lien on your property for unpaid income taxes or property taxes. Tax liens often take priority over other liens, meaning they get paid first at closing.

While serious, tax liens don't prevent a sale as long as you have enough equity to cover the debt.

Judgment liens

If you lose a lawsuit and the court awards money to the other party, that creditor can file a judgment lien against your property. This gives them a legal claim to collect from your homes value.

You can still sell, though the lien amount will come out of your proceeds at closing.

Mechanics liens

Contractors, subcontractors, or suppliers who weren't paid for work on your home can file a mechanics lien. This typically happens after renovation projects where payment disputes occurred.

Resolving a mechanics lien usually involves paying the outstanding balance or negotiating a settlement with the contractor.

HOA liens

Homeowners associations can place liens for unpaid dues or special assessments. HOA liens can escalate quickly, and in some states, the association can initiate foreclosure even if your mortgage payments are current.

Child support and alimony liens

Government agencies or former spouses can place liens on your property for unpaid family support obligations. Courts take child support and alimony liens seriously, and they'll need to be addressed before your sale can close.

How to find out if there are liens on your property

You might not know a lien exists on your property, especially if it was filed years ago or resulted from a dispute you thought was resolved. There are a few ways to check.

First, you can order a title search. A title company will search public records and provide a report of all liens recorded against your property. This is the most thorough option, and what happens during any home sale anyway.

Second, you can check with your county recorders office. Many counties offer online databases where you can search property records yourself, or you can visit in person and request assistance.

Third, you can review your credit report. Some liens appear on credit reports, though not all of them will show up there. It's a good starting point, but not a complete picture.

What happens when a lien is put on your house

A lien clouds your title, which means you can't transfer clean ownership to a buyer until the debt is resolved. It can also affect your credit score and limit your financing options if you want to refinance.

Here's what a lien doesn't do: it doesn't mean you lose your home immediately. A lien is a claim, not a foreclosure. However, if the debt remains unpaid long enough, some lienholders, particularly tax authorities and HOAs, can eventually force a sale to collect what they're owed.

The practical impact is that most buyers won't purchase a home with unresolved liens, and most lenders won't finance one. That's why clearing liens before or at closing is standard practice.

How to sell a house with a lien

Selling a home with a lien involves a few extra steps, but the process is manageable when you know what to expect.

1. Order a title search on your property

Start by getting a complete picture of what liens exist. A title search reveals all recorded claims, their amounts, and who holds them. This prevents surprises later in the process and gives you time to address any issues before listing.

2. Determine the lien amount and type

Once you know what liens exist, contact each lienholder to confirm the exact payoff amount. Some liens accrue interest or fees over time, so the current balance may differ from the original amount. Getting a written payoff statement ensures you're working with accurate numbers.

3. Contact the lienholder to discuss options

Many lienholders are willing to work with you. They might accept a payment plan, negotiate a reduced payoff amount, or agree to release the lien at closing in exchange for payment from your sale proceeds. Open communication often leads to workable solutions.

4. Negotiate or pay off the lien

You have several paths forward. You can pay the lien in full before listing your home. You can negotiate a settlement for less than the full amount. Or you can arrange to pay the debt from your sale proceeds at closing.

The right approach depends on your financial situation and how much equity you have in your home.

5. Work with a title company at closing

The title company coordinates lien payoffs directly from your sale proceeds. They ensure each lienholder receives payment, obtain lien releases, and deliver a clear title to your buyer. This is standard practice and happens seamlessly when everything is documented properly.

6. Consider a cash offer for a faster sale

Cash buyers can often close faster and with fewer complications than traditional buyers who need financing. A cash offer gives you certainty about your sale price, which helps you plan exactly how much will go toward lien payoffs and how much you'll walk away with.

Get a cash offer from Opendoor

Can a judgment lien stop you from selling a house

A judgment lien doesn't prevent you from listing your home or accepting offers. However, it does need to be resolved for the sale to close and for the buyer to receive a clear title.

Your options typically include paying the lien from your sale proceeds at closing, negotiating with the creditor for a reduced settlement, or disputing the lien if you believe it's invalid or already paid.

If the judgment lien amount exceeds your available equity, you'll need to negotiate with the creditor or bring additional funds to closing. Working with a real estate attorney can help you navigate complex judgment lien situations.

What to do if your lien exceeds your home equity

This is a challenging scenario, but you still have options. If you owe more on liens than your home is worth, you're considered "underwater" on that debt.

One option is a short sale, where you sell for less than you owe with your lender's approval. The lender agrees to accept less than the full loan balance, which requires their sign-off and takes longer than a traditional sale.

Another option is negotiating with the lienholder. Some creditors prefer partial payment over a lengthy collection process and will accept less than the full amount to release the lien.

A third option is paying the difference at closing. If you have available funds, you can bring cash to cover the gap between the sale price and the total debt owed.

Selling a home with a lien can be simple

Liens sound intimidating, but they're a normal part of real estate. Most homeowners have at least one lien, their mortgage, and homes with various liens sell successfully every year.

The key is understanding what you're working with and communicating with lienholders early. A knowledgeable real estate agent, title company, and, in complex situations, a real estate attorney can make the difference between a smooth closing and a stalled transaction.

If you're looking for certainty and simplicity, a cash offer can help you understand exactly what you'll net from your sale.

Get a cash offer from Opendoor

FAQs about selling a house with a lien

Is it illegal to sell a property with a lien on it?

No, selling a property with a lien is not illegal. However, you're generally required to disclose known liens to potential buyers. The lien typically gets satisfied at or before closing, so the buyer receives a clear title.

Can you transfer property with a lien to a family member?

You can transfer property with a lien, but the lien stays attached to the property and transfers with it. The new owner becomes responsible for the debt, which is why most transfers, even between family members, require lien resolution first.

How many liens can you have on a house?

There's no legal limit to the number of liens on a property. A home can have multiple liens from different creditors, and they're typically paid in order of priority at closing. First-position liens, usually your primary mortgage, get paid before second-position liens.

What should buyers know about buying a house with a lien?

Buyers benefit from conducting a title search before purchasing. Any unresolved liens transfer with the property, making the new buyer responsible for debts they didn't incur. Title insurance protects buyers from undiscovered liens, which is why lenders require it.