Removing A Property Lien

A lien is a legal claim or right against a property by creditors. Finding any type of lien on a property throughout a real estate transaction could be a complete deal breaker in the sale. At a minimum, it may slow down the transaction procedure and turns out to be a nuisance for buyers, salespeople, and mortgage providers alike.

Removing A Property Lien

However, what happens when you are ready to put your home up for sale, but a title search exposes that there is a lien against it?

Following a title company discovering the lien, the transaction is going to usually be put on hold and the closing postponed. After there is a resolution to the lien, the closing for the sale can be rescheduled. Take into account that if a buyer is getting financed, the buyer’s new mortgage provider is unlikely to agree to finance the property until an acceptable resolution to the lien is established. Similarly, if a buyer is concerned that a seller cannot fulfill the lien, subject to their agreement, they could choose not to buy the property.

The wonderful news is that you could still sell the home, however, a resolution to the lien must be cleared in advance of the sale.

My Property Has a Lien … What Now?

Usually, it’s the seller’s responsibility to pay off the lien on his or her property on or prior to the day of closing. A lot of liens are paid off from the revenue of the sale when closing time comes. Whereas the removal of a lien can be a complicated procedure, there are various ways of doing so, comprising of:

Paying off the Lien – After you ascertain that the lien is valid, the easiest way for removing it is to simply pay it off. Even when you need to borrow funds from relatives or friends, satisfying the debt is going to allow the property to become unimpeded, sold, and closed. You might be able to negotiate with the mortgage provider for a decreased settlement amount, subject to the type of debt and the seller’s circumstance.
Petition for a Release-of-Lien Form – Following you paying off the remainder of your debt in full, the mortgage provider is going to file the form, known as release-of-lien. This is going to act as proof that the debt has been paid off and is going to officially release the lien from your home. The form gets filed with the county registries office in the county where the property is located, and the original gets returned to you.
Wait Until the Statute of Limitations Expires – In some cases, you can have a lien removed without paying off the debt by waiting until the statute of limitations expires. For instance, the period a judgment lien remains on your property differs state to state. In the state of Arizona, this type of lien terminates 10 years following the date it was recorded. Using this method, you are still going to owe the debt, but having the lien removed opens the property to be sold.
Negotiate with the Mortgage Provider – It could be possible to work out a deal;, in which the lien is settled without total payment. This can be sought using mediation, intervention, or informal negotiations.
File for Bankruptcy – Bankruptcy is going to likely eliminate your responsibility to pay a bonded debt (like a mortgage), including any deficiency balance; nevertheless, you won’t be able to keep the collateral (the home, vehicle, or other property) unless you pay that which you owe. Bankruptcy, on its own, does not terminate a lien. If you are thinking about filing for bankruptcy, talk to a knowledgeable bankruptcy attorney that understands the issues that face you and can help you create strategies for retaining the assets that are most paramount to you.
Get a Court Order – Occasionally, liens are acquired through deception, coercion, betrayal, or other illegal means. If you think your lien is invalid and the mortgage provider is not going to rectify the situation, you can file a motion through court and petition a judge to eliminate the lien. This can be challenging to prove, so concise evidence is going to be required. If the court accepts that the lien is not valid, it is going to provide an order that is recorded to show the lien eliminated from your property.

If the seller cannot clear the lien in a contractual period, the buyer may legally withdraw from the deal. Nevertheless, buyers that are fixed on a specific home may determine that it’s worth the extra time and energy to wait for the seller to settle the issue.