What You Should Know About Property Liens Before You Sell

Thinking about selling your home? Before you jump into photos, pricing, and prepping for showings, there’s one thing you don’t want to overlook: property liens. They’re more common than most sellers realize, and they can slow down — or even stop — your sale if you don’t catch them early. The good news? Liens aren’t as scary as they sound once you understand what they are and how they work. This guide walks you through the basics in simple terms, so you know exactly what to expect and how to handle them before you list your home.

What Is a Property Lien?

• A lien is basically a legal claim someone (a creditor) places on your property because you owe them money. 

• It’s entered into public records, so when you're selling, a title company will usually find it when they run a title search. 

• Until you “clear” the lien (i.e., pay what's owed or otherwise satisfy the claim), the title isn’t considered clean — and that can stop a sale in its tracks. 

Why Liens Can Mess with Your Home Sale

1. Delays or Blocked Sale
   If there’s a lien, the buyer’s lender or title company might refuse to move forward until it’s cleared.

2. Lower Sale Proceeds
   Since liens are debts, when you sell, some of your sale money might go toward paying them off. 

3. Scares Off Buyers
   Buyers might be wary of taking on a property that has existing debt. 

4. Clouded Title
   A lien is part of what’s called an “encumbrance”—basically something that clouds or weakens your title. 

Common Types of Liens You Might Run Into

Here are some of the most common kinds of liens, and how they apply:

• Mortgage Lien — This is probably familiar: when you take out a mortgage, the lender puts a lien on the house until it's fully paid off. 

• Tax Lien — If you don’t pay your taxes (federal, state, or local), the government can place a lien on your property. 

• Mechanic’s Lien — This is from contractors, builders, or suppliers who haven’t been paid for work done on your property. 

• Judgment Lien — If you’ve lost a lawsuit and owe money, the court can let the winning party put a lien on your property. 

• HOA / Assessment Lien — If you belong to a homeowners’ assoc or there are municipal assessments, failing to pay could trigger a lien too. 

What Happens When You Try to Sell With a Lien

• The title company (or whoever is handling closing) will find the lien during their title search.

• If there is a lien, you (the seller) typically need to pay it off before or at closing.

• Once the lien is paid, you’ll get a lien release — a document proving that the debt is settled so that you can transfer the property without that claim hanging over it. 

• In some rare or complex cases (especially with involuntary liens), you might negotiate or get legal help.

What You Should Do Before Listing Your Property

Here are some practical tips to help you navigate liens when you're selling:

1. Order a Title Search Early
   Don’t wait until the buyer’s side does it. Know what liens exist, so you’re not blindsided. 

2. Get the Payoff Amount
   Reach out to whoever holds the lien (lender, contractor, IRS, etc.) and ask for a “lien payoff statement.” That tells you exactly how much you owe.

3. Set Aside Sale Proceeds
   If there’s a lien, plan for how much of your sale money to reserve to clear it.

4. Get the Release in Writing
   After you pay off a lien, make sure you get a recorded lien release document. That ensures the lien is officially removed. 

5. Think Twice About Selling As-Is
   If you try to sell a property with the lien still on it, you might need to reduce your asking price or find a buyer willing to take on that risk. 

6. Ask for Legal Help When Needed
   Especially for tax liens or complicated claims — getting a lawyer can help.

FAQs: Common Questions When Selling With a Lien

Q: Can I still sell my house if there's a lien?
A: Yes, many homes are sold with liens. If it’s a mortgage lien (voluntary), you can pay it off from the sale proceeds. 
But if it’s an involuntary lien (like a tax lien), things can be trickier — often you’ll need to clear it first. 

Q: Who pays off the lien — me (the seller) or the buyer?
A: Typically, you (the seller) pay it off. The title company needs a clear title before closing. 
In rare situations, a buyer might agree to take on a lien, but that’s uncommon and more complicated. 

Q: What is lien priority?
A: Not all liens are equal. Some liens (like tax liens) have higher priority, which means they get paid first from the sale proceeds. 
Usually, liens are paid in the order they were recorded (“first in time, first in right” rule), though there are exceptions.

Q: How long does it take to remove a lien?
A: Depends. Once you pay, getting the lien release recorded might take a few days or weeks. For more complicated liens, or if there's a dispute, it could take more time.

Q: What if the lien is more than what I’ll get from the sale?
A: That’s possible. In that case, you might need to bring extra money to closing to cover the difference, or renegotiate. Also, in worst-case scenarios, you might not be able to do the sale cleanly until it's settled.

Why This Really Matters

• Protects You Legally: If you don’t deal with a lien, the buyer’s side might refuse to proceed, or you could face legal complications.

• Maximizes Your Profit: Knowing and clearing liens helps you know exactly how much you’ll walk away with.

• Builds Buyer Trust: A property with clean title (i.e., no lingering claims) is way more attractive to serious buyers.

• Avoids Surprise Costs: If you don’t plan for lien payoffs, you might be caught short at closing.

If you're selling your property, don’t gloss over liens. Even though they sound “legal-y,” they’re actually quite common, and manageable. Treat them early, be transparent, and plan ahead. That way, you can sell without nasty surprises and walk away with what you deserve.