This is a common question, and US Direct Home Buyers works hard to educate people about liens. We help homeowners sell houses with liens and offer many solutions along the way.
To sell a house with a lien on it, you need to learn what types of liens affect the sale of your house. We compiled a comprehensive list of types of liens. In this post, we unpack each lien in relation to the sale of your house. Then, we provide tips for negotiating the lien with a creditor.
Judgement Liens:
Judgement liens are a result of a judgement in a court of law. In this case, the plaintiff, who wins a monetary judgment, is termed a “judgment creditor”, while the defendant is known as a “judgment debtor.” Since these liens are the subject of a judicial decision, they’re not subject to negotiation.
They could be the result of any suit: negligence, malpractice, or any other civil claim. A judgement lien will remain attached to your house for ten years. These are actually the only types of liens that can be absolved through filing Chapter 7 bankruptcy; statutory liens can’t be avoided in bankruptcy.
Statutory Liens:
A statutory lien is created automatically by way of statute, meaning a lawsuit or judicial decision is not necessary for the lien to be placed. These include:
Child Support Lien
These are liens placed on an individual who is delinquent on his child support payments. The lien remains on the debtor’s house until he/she pay the amount due, or sells the house, or is forced into a lien sale by the recipient. The fortunate thing about these types of liens is that if they are placed on a house, they can be negotiated down relatively easily and they can also be temporarily lifted to permit the sale of the house.
Property Tax Lien
These liens often take priority over all other liens on your property, even ones placed before. If you cannot pay your taxes, the government may even force a sale of your property to pay the property taxes. This is why, in the event that you don’t pay your property taxes, your lender will often pay the taxes and add the sum to what you owe on your mortgage. That way the creditor can keep their first lien position to ensure that they are repaid in the case of a sale. These are essentially impossible to negotiate down. The county never negotiates.
IRS Lien
The IRS is not easy to negotiate with, but a professional will have greater success. US Direct Home Buyers had a client who owed the U.S. government $2 million dollars against a home she was selling for $100,000. Her husband committed Medicaid fraud, fled the country and was a wanted felon. Though she was found not guilty of fraud, she was stuck with a $2 million dollar debt. After our negotiations, a partial release of lien was awarded and all the proceeds of the sale went to the debt. She did not receive profit from the sale, but escaped any further debt. Most creditors will take something over nothing.
HOA Lien
Homeowners Associations have the right to collect fees from residents in their communities. If residents fail to pay these fees, HOA’s have the right to place a lien on the resident’s home. They can even have your home foreclosed over a few thousand dollars. The HOA doesn’t like to negotiate, but they will if they have to. This allows a creditor to possibly get a reduction or a partial release of lien in order to sell their home.
Mechanic’s Lien
Anyone contracted to make repairs on your house can place a lien on it if you do not pay them. You absolutely should pay them all that they’re owed, but in many circumstances these can be negotiated down.
Weed Cutting Lien
Placed by the city or county of residence in the event of vacant or unattended houses which become a nuisance.
Warehouseman’s Lien
These are given to warehouses and other storage facilities on property stored at the premises to secure unpaid storage fees.
Vendor’s Lien
The seller of a house has the right to take it back from the buyer in the event that they don’t pay the full amount. Sometimes it’s used in the application of purchase-money mortgages; a note secured by a mortgage given by a buyer (as the borrower) to a seller(as the lender) as part of the purchase price of the real estate. This is an alternative way to finance one’s home for those who can’t qualify for a large enough bank loan. Instead of relying entirely on the bank, some people choose to borrow directly from the seller of the house, usually a financial institution. These are difficult to negotiate.
Medicaid Lien
Medicaid can apply everything from hospital bills to nursing home charges against your home, meaning that if your loved one passes away, they’ll apply a Medicaid lien against the estate. When the heirs sell the house, Medicaid will need to be paid something. They do negotiate though, and we at US Direct Home Buyers negotiate with them all the time.
Home Equity Loan
Only the senior mortgage holder has first lien. If there are two mortgages – a traditional mortgage and a home equity loan – the home equity is the “junior” lien holder. If the junior lien holder doesn’t release the lien, the house may go into foreclosure by the first lien holder. In this case, the second lien will be eliminated and it is in the creditors’ best interest to negotiate. We employ professional title negotiators to present an organized case with your HUD statement and other liens. For instance, if someone has a $144,000 mortgage loan on the property, and a $164,000 home equity judgement against the property, the creditor with the $144,000 mortgage understands they are a junior lien to the $164,000 judgement. It takes time and experience to get all these items negotiated.
It is not wise to navigate it alone
Let the experience of US Direct Home Buyers take the lead and negotiate and resolve your particular case on your behalf. Even though we’ve made a pretty comprehensive list of the liens you may encounter, you may ask what other types of liens affect the sale of your house. Talk to us, and we can uncover what other liens you might face. Don’t negotiate on your own – most creditors will deny your requests. Also, even if you do manage to gain their sympathy, it really helps to have someone on your side who knows about the art of leverage and negotiation. If a lender knows that you’re desperate, they will be more unforgiving, not less. But if the person they negotiate with has experience and can appeal to their bottom line, you may be able to make a much more forgiving agreement.
Simply fill out the form below to get the discussion started today and let’s see what we can do for you!