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What is lien and can it affect the sale of a home?

Harry Hasbun

Harry Lives in Gainesville, Virginia with his wife and three boys...

Harry Lives in Gainesville, Virginia with his wife and three boys...

Oct 24 3 minutes read

To begin, let’s discuss what a lien even is. It is a legal notice of an unpaid debt. It can be anything from unpaid real estate taxes to an unpaid contractor’s bill, but it is legally attached to your property record. These can become an issue as they will need to be paid in order for the sale of your home to go through.

While a property is under contract not only is the lender working on the loan for the buyer, but the title company will be doing a title search. This ensures that the seller has the right to sell the property. During the course of this search, the title company will also discover if there are any liens that exist against the property.

In most cases, a seller will already be aware if there is a lien on their property. However, there are instances where it may come as a surprise. It could have existed under the previous owner and was missed in a prior title search or the seller may not have known one forgotten one existed.

Since a property can’t be sold until the lien is either satisfied or released, the title company will contact the seller to inform them if one is discovered. It is up to the seller to settle the lien. A seller can provide evidence of the lien being released a few different ways. First, after paying the lien, provide receipts or paid invoices to show it has been paid. Second, the seller can work with the lien holder to pay the cost of the lien out of the proceeds at closing. Lastly, the seller can dispute a lien and provide evidence of a court decision that the lien has been released.

If the lien is not against the current seller, then the title company will work to discover if the lien was released. However, if the lien belongs to the current seller, it may be easier to just work with the lien holder to pay the lien. Going to court to fight a lien can be an expensive and long process.

In the end, a lien may delay the sale of a property but it does not mean a property cannot be sold. It is just another factor that needs to be addressed prior to closing. Questions? Contact us today! And remember, with us, advice is always free. Reach us at [email protected]

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