If you’re a homeowner in Florida looking to sell your house but have substantial liens on the property, you might be left feeling hopeless. Don’t despair because hope is not lost. Read here to learn how you can work around a lien on your property.
Selling a home is never an easy process. It takes time, effort, and often a bit of money to bring your house up to selling condition. Once buyers start exploring, they’ll quickly discover all the little skeletons hiding in the closet. For some reason, there’s something about a buyer’s eye that can find the smallest defect in a home and use it to negotiate the price down. If the paint needs retouching, a buyer will immediately know. If the kitchen appliances are a few years out of date, a buyer will immediately know. Therefore, it’s important to put all your ducks in a row before putting a house on the market.
But not all skeletons can be so easily found and rectified. Some cannot even be seen. For example, a lien against the property. No buyer will walk through your home and just sense, “Ah-ha! This property has a lien against it,” then turn and run. It’s not until they’ve begun the closing process that they will be told about the potential for long delays and then drop their offer. If you find yourself in this sort of situation, you may not even know that your property has a lien until it’s too late.
Surely, not all hope is lost, though, right? There must be something that you can do if you need to sell but there’s a lien against your property. Thankfully, there is. While the lien will likely eat into any profits that you’d make off the house, it doesn’t explicitly prohibit anyone from buying or selling. In this article, we will walk you through what a lien is, what it means for your property, how to work around it, and hopefully get you on the right path to selling your home. Let’s begin!
What Exactly Is a Lien and Where Did It Come From?
Like we said, for some homeowners, they do not even realize there is a lien on their property until they go to sell. With that in mind, we will approach this topic from the standpoint that you may not be familiar with the concept. If you are familiar, please feel free to skip ahead to the bottom where we will discuss how you can work around a lien.
For a textbook definition, a lien is a claim held by a third-party against your property. This means that someone besides you has a right to claim your home as theirs. Pretty scary, right? So, if your home has a lien, you might be wondering where it came from. Think of it as a negative mark on your credit report. If you miss payments, the credit card company will issue negative marks against you, affecting your overall credit score. Until you pay off your debts, your credit score will continue to suffer.
The same can be said for your home. While you are more likely to face foreclosure if you’re delinquent on the mortgage, paying off the loan isn’t the only cost associated with homeownership. Liens often come from parties who don’t have large enough claims to seek the whole property but can still file legal rights to a portion of it. For example, if you hired contractors, but did not pay them, they have a legal right to the work done on your home. Or, if you have not paid your property taxes, the government has a claim to a portion of the property until you do so. Even an ex can make a claim if you have not been paying child support.
What Does A Lien Mean for My Property?
The real question here, then, is “Can I still sell my home even if there is a lien on it?” The answer is yes and no. You are not barred from selling, but the lien will likely cause a few setbacks on the way. Don’t expect to escape your obligations without first paying your debts from the profit you hoped to make from the sale.
For instance, if a buyer puts in an offer for $225,000, and you still owe $130,000 on the mortgage, at closing you would pay off the mortgage and be left with $95,000 in profit. But, if the government has placed a $10,000 lien against your home for missed taxes, you will first have to pay off that sum of money. Therefore, you’ll be shorted down to $85,000 and then still be left to pay off any closing costs.
To be honest, though, this example is a best-case scenario. Let’s say that your home doesn’t have enough equity to pay off the mortgage AND liens. Whatever profit you net will immediately be burned up by paying off the debts. Then, you will still be left with negative equity needing to be paid off.
Let’s go back and reassess our example. Say that a buyer puts in an offer for $225,000 but you still owe $180,000 on the mortgage. You’re desperate to sell, so you accept their offer. But at closing, several liens are found, totaling $50,000. After paying the mortgage, you’re left with $45,000, all of which will be spent paying off liens. Your sale doesn’t amount to enough to cover the entire cost, meaning that your sale could fall through.
Getting Rid of a Lien
Now that we’ve thoroughly explained what liens are and where they come from, let’s talk about how to get rid of them. The first step you should take is to try and pay it off. Once it’s been paid, the mark will be taken off your property’s title and you’ll be set to move forward with selling. Unfortunately, though, not everyone can afford to pay off their liens in full. If you find yourself in this situation, don’t lose hope.
As it is a monetary sum, you have the option to negotiate. Most parties are smart enough to realize that, if you’ve not made a payment, it’s probably because you cannot afford to. Rather than writing off the money completely, they could be more willing to take a partial payment to remove the lien or put you on a payment plan.
Another option is to be honest with your buyers and negotiate with them. While it’s awfully unlikely for a buyer to do so, you could try talking them into taking on the remainder of the lien. The odds are slim that they would be willing to take on your payments but it doesn’t hurt to ask. Just keep in mind that financiers are wary of lending money to buyers to pay off a lien. If they agree to take it on, they could struggle to get approved for a loan.
That’s not to say that there aren’t options for transferring a lien to the buyer. In some cases, houses bought at auction or through a foreclosure include a lien in the buyer’s list of responsibilities. What the buyer makes up for in a low purchasing price, they can end up paying in substantial liens.
If you’re not willing to put your home up for auction or let it fall into foreclosure, one of the best options is to go through a professional service. Some companies will buy your home—liens and all—at a reasonable price with the intent of fixing it up and flipping it.
Selling Through A Real Estate Solutions Company
My Florida Home Buyers is a real estate solutions company, meaning that we are not your typical real estate agency. We are not looking to sell your house for you. Instead, we act as the buyer. We will evaluate your situation and determine whether or not you qualify for our services. Usually, this means your home has fallen into foreclosure, requires quite a bit of repair, or is hindered by significant liens. We can offer you an upfront cash payment, close through a proper legal process, fix up the house, and make a profit by reselling it later.
This may sound too good to be true, but keep in mind that you will not make as much on the sale as you would if you were to sell it on the market. For some people, this doesn’t matter. You might not even make enough to cover your debts, even if you do sell on the market. For instance, our example of a home with negative equity up above.
So How Does This Work For You?
It’s a pretty simple process. You will first provide some basic personal information, as well as details on the house. We will then determine how we can best help you. We will need to know your home address, the number of bedrooms and bathrooms, a target selling date, whether you or a tenant is occupying the property, and the general condition of the home.
After assessing your situation, if you meet our criteria, we will reach out to you and set up a time to view the property. Expect to spend about half an hour with us as we walk around, take photos, and work out how many repairs we will need to make. From there, we will figure these details into your home’s value and make a final offer. We aim to make the most reasonable payment for your home.
We would like to point out that we are completely transparent with out offer. We guarantee it is the final and true amount you will get in your bank account. With other companies, you might end up paying a commission or any closing fees out of the sum they show you. Unlike our competition, we offer a net sum to put your worries at ease. That way, when you receive a check, there’s not a lump missing from what you’re entitled.
However, we asked that you are honest about your home’s situation to guarantee that we quote an honest, upfront payment. If you are not upfront about how much money stands against the property in liens, we cannot accurately assess your situation, and you will be stuck paying any outstanding debts out of our offer. We are here to help, and we regularly work with clients stuck in this sort of situation. Don’t feel overly ashamed to the point that you upset the final offer.
If you accept our company’s final offer, we will send it through a proper attorney and your sale will close! From there, the home is out of your hands. Just pack up and move out. We will take care of it from there. There’s no need to clean up the property or fix anything. Once the closing papers come through, get them signed and notarized and you are free of your obligation.
Selling a home will never be a breezy walk through the park. But having a few liens on your property can cause a headache to turn into a full-blown migraine. If you are worried that your home just won’t sell because of a few outstanding debts, don’t lose hope entirely. You can try negotiating the fees, talk to your buyers, and see if they’ll take over the remainder, or, if you need to sell fast, contact a professional real estate solutions company.
If you are in the Orlando area, come by our office and we can offer you an honest and reasonable upfront cash payment for your property. Our offers have no hidden fees or commissions, so what you see is what you’ll get. We are prepared to work with you no matter how many liens are on your house or if you need some major repair work.
Give us a call at (352) 519-4512 or fill out our online information form and we’ll get you set up with an appointment in no time. Don’t let a lien keep you from selling your property. Let the professionals handle it for you.