The home selling process can be fraught with potential issues you have to deal with. One that may cause considerable consternation is the lien.
What is a lien? How does it affect the buying process and what’s the best way to go forward? Check out the information below to learn about closing on a house with a lien.
What is a lien?
A lien is a claim over a piece of property by a creditor like a lender or a bank. It restricts the sale of a property until a debt is met. Liens are usually uncovered following a title search and homeowners may not be aware that the debt even exists.
These searches are an essential aspect of the selling process because it informs the buyer of irregularities in the title of the property or of claims that need to be resolved. Many title issues can go as far back as 50 years. Luckily, they don’t have to stop the sales process outright.
Can you sell a house with lien on it?
There are a number of ways you can resolve a lien. In many cases, simply paying the debt will clear the issue. In other cases, a real estate agent can negotiate a payment plan with the lender to keep the transaction going.
A more serious lien involves the non-payment of state taxes. You will usually need an accountant or a lawyer to resolve the issue. it. If you can’t afford to clear the debt in one go, you can offer to make a partial payment and then agree on a payment schedule on the balance.
The most serious type of lien is non-payment of federal taxes. Debts related to the IRS can take a long time to settle, and many buyers will simply lose interest. A closing attorney may be able to reduce the debt, but this is dependent on the situation.
Why home buyers need a title insurance
Once the lien on the title of the property you’re buying is resolved, it still makes sense to get title insurance yourself as the new homeowner. Even if you cleared all issues on the title of the house before closing, you never know what may happen.
A long-lost heir may pop up and claim that the house is rightfully and legally theirs. If that happens, and the court rules in favor of the claimant, the title insurance will pay for your legal fees and reimburse the lender on what you owe on mortgage payments.
While it won’t cover your down payment and you’ll still be compelled to vacate the house and look for a new place to stay, you will, at least, be protected part of the way.
With a clearer idea on how to go ahead and close the deal on a house with a lien, you need to have an experienced real estate team by your side that can work through the process. A top Realtor in Merced, CA, will have the experience and the knowledge to resolve legal issues as quickly as possible. You can rely on Soldavi Realty for your real estate needs in California’s Central Valley. Call 209.383.3000 today!