One of the most common reasons for a home sale to fall through is the presence of property liens. Often the sellers are not even aware they have a lien on their home and the delay caused by having them removed can cause a qualified buyer to look elsewhere.
Along with other pre-listing tasks, such as repairs and curb appeal projects, sellers should order a title search to determine if any liens are on the property. Some liens are expected, such as the mortgage lien which ensures any home loan is paid off at the time of close, but others might come as a surprise.
Here are a few liens which can derail your closing:
- Mechanics Lien - A contractor may place a mechanics lien on your home to make sure they are paid after a home project.
- Divorce Lien - Even if you and your spouse have agreed on the sale of the home, the court may need to approve the sale before the lien can be removed.
- Homeowner’s Association - Past due HOA payments and assessments can lead to a lien on the home.
- IRS and Property Taxes - A government legal claim against your property when you neglect or fail to pay a tax debt.
- Judgment Liens - Is a court ruling that gives a creditor the right to take possession of a debtor's real or personal property if the debtor fails to fulfill his or her contractual obligations.
- Credit Card Liens - If you default on a credit card and the issuers get a judgment, they can attach a lien to your property.
Liens must be dealt with before a home can change title. Often the lienholder will negotiate the payment, but others will want full payment before releasing the hold. Either way, dealing with liens can take time and money. It’s always best to remove liens before listing your home for sale.
Did you ever find out at the last minute that the title search found an unexpected lien on the seller’s house that delayed your closing? What was your experience like?