This document summarizes how selling a home with a lien impacts the real estate process. It explains that there are two types of liens - voluntary and involuntary - and discusses options for resolving liens before or during a home sale. Homeowners can either pay off the lien before listing the home or use sale proceeds to cover the outstanding amount. While more complicated than a lien-free sale, it is still possible to sell a home with a lien by addressing the issue upfront with the real estate agent and buyer.

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Selling a House with a Lien
by Kevin Brunnock (https://kevinbrunnock.com/author/kevinbrunnock/) on August 19, 2021
(https://kevinbrunnock.com/selling-a-house-with-a-lien/) in Kevin Brunnock | Real Estate
(https://kevinbrunnock.com/category/kevin-brunnock-real-estate/)
Many homeowners find themselves in a position where they must sell their current
home even though there is a lien against the property. They worry that the lien could
possibly hinder their ability to market the house.
What is a Lien
Investopedia (https://www.investopedia.com/terms/p/property-lien.asp) describes a
property lien as a: “legal claim against property that allows them to collect what they’re
owed.” The two types of liens that are placed on the property are voluntary and
involuntary. Voluntary liens are the most common. They refer to contracts that property
owners know about. Voluntary real estate liens usually involve mortgages and home
equity loans.
Involuntary real estate liens are more complicated and often catch the property owner
by surprise. Some people don’t learn about the involuntary lien until they attempt to sell
the property. Most involuntary real estate liens involve problems with property taxes or
unpaid construction bills.
How Liens Impact Real Estate Sales
Kevin Brunnock | NYC Real
Estate Professional
(https://kevinbrunnock.com

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Selling a house that has a lien on it is more complicated than selling one that the owner
owns free and clear, but it’s not impossible. There are a few ways that the owner can
resolve the issue.
The first thing the current property owner must do is learn exactly what the lien is.
Sometimes the lien turns out to be an error, in which case the property owner can
dispute the issue. Winning the dispute usually involves proving that the tax or
construction bill was actually paid or was the result of a clerical mistake. The dispute
process will take time and could significantly delay the sale process.
For voluntary liens, homeowners have two options. The first is that they can simply pay
off the lien prior to listing their home on the real estate market. Settling the lien prior to
the sale not only gives the homeowner more freedom to play with the price of the home
but can also speed up the closing process after an offer has been accepted. Realtor
Magazine (https://magazine.realtor/daily-news/2017/12/04/5-most-common-reasons-for-
closing-delays) reports that handling property liens accounts for approximately 11% of
all closing delays.
The other option is to use the money from the sale of the property to cover the
outstanding lien. Since many homeowners lack the liquid capital to pay the lien prior to
selling the property, this is the option they usually opt for. In this case, the homeowner
will want to discuss the matter with their real estate agent and make sure that an
agreement to pay off the lien is included in the final settlement agreement.
Anyone who is even casually thinking about selling a home, should do a background
check on the property and know exactly how many and what kind of liens are currently
on file for the property.
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