Selling a house in York can feel daunting when faced with liens or tax issues. If you lack the funds to settle the debt, you may find yourself stuck with the property longer than desired, worsening your financial situation. In this post, you will gain insights into property liens and discover strategies to successfully sell your house, regardless of the challenges you encounter.
What Is A Lien?
According to Investopedia, a property lien is a legal claim on assets that grants the holder the right to access the property if debts are not paid. To establish a property lien, it must be officially filed and approved by a county records office or state agency. Subsequently, the property holder is notified with specific terms indicating the repossession action that has been initiated for the property.
In the realm of real estate, should a homeowner fail to make timely mortgage payments, their lender may impose a lien on the property. Similarly, if work is carried out on the premises without compensation, the homeowner can face a mechanic’s or judgment lien. In the event that the homeowner is unable to settle the outstanding lien, the issuing party retains the power to initiate foreclosure proceedings. By imposing a lien, the creditor effectively prevents the sale of the property until the debt is fully satisfied.
Common Types of Liens
Statutory
These liens are imposed automatically by state or federal laws. They are classified as involuntary because the property owner is unlikely to agree or refuse to pay.
Tax liens
These are some of the most common liens encountered by home buyers in the Central Pennsylvania region. Many individuals find themselves falling behind on their taxes, resulting in the need to repay the outstanding property taxes in the form of a lien. Typically, this occurs during the house selling process at the time of closing. Liens can be imposed by local and federal officials, serving as a claim against your property. To determine if there is an unpaid tax lien on your property, you can conveniently check using the provided links below.
Mechanic’s liens
When a contractor or mechanic performs work on your property and you fail to compensate them, they have the right to place a mechanic’s lien, also known as a construction lien, on the property.
Financing issues with buyers can sometimes delay new home construction, resulting in contractors not receiving payment for their services. In such cases, contractors are entitled to file a lien to secure payment for the work they have done.
Mechanic’s liens can be resolved through various methods, but often it is more convenient to reach a settlement with the contractor for a predetermined amount before attempting to sell the house.
Another type of lien commonly known as a first mortgage or satisfaction agreement is a home-buying lien. This type of lien is typically used to secure the lender’s investment in the property by using the home as collateral. If you are trying to sell your house and the amount owed on your mortgage exceeds the agreed-upon sale price, you will need to bring additional funds to the closing table.
An example of this situation occurred during the housing bubble of 2008 when many individuals found themselves “upside down” on their properties, meaning they owed more on their mortgage than the value of their house. In such cases, many people are forced to foreclose on their homes because the lender is unwilling to accept anything less than the original loan amount secured by the property.
Consensual
Consensual liens, as the name suggests, are entered into willingly. Both parties mutually consent to the terms of the lien and affix their signatures to the agreed-upon conditions.
Purchase-Money Security Liens
The easiest way to explain this type of lien is when a borrower utilizes down payment funds from a lender to purchase a house. In this scenario, the borrower receives a “credit” to facilitate the property transaction, with the property itself serving as collateral. Examples of purchase-money security liens include home mortgages, car loans, and other credit-based property acquisitions.
On the other hand, non-purchase-money security liens operate in the opposite manner. In these cases, the lender already possesses property that they leverage as collateral to secure additional borrowing. Refinancing, reverse mortgages, and second mortgages serve as clear illustrations of how this type of lien is employed.
Judgement
These are undoubtedly the most undesirable liens to avoid, as they grant members of the judiciary the authority to make decisions regarding your property. This has the potential to prioritize creditors over your intended plans for the property, giving them the right to determine its fate. Losing possession of your property would significantly diminish your influence over the sale process and the choice of buyer.
Options to Resolve the Lien
Sell Directly To Awakened Home Buyers
By selling your house directly to Awakened Homebuyers, you can finally put your liens and tax issues behind you. No more worries about finding the funds to settle outstanding debts or back taxes.
We’ll take care of all the financial obligations, while ensuring a swift and fair purchase of your property. Say goodbye to the hassle and headaches in a matter of days, and sell your house promptly in York, free from any liens or tax problems.
Create a Repayment Plan
Although the idea of paying off all your debts at once may seem overwhelming, many creditors are willing to collaborate with you to create a feasible payment plan. Rather than feeling defeated, it’s important to reach out to your creditors and make an effort to find a resolution. Ultimately, their aim is to collect what is owed to them.
By demonstrating your willingness to cooperate, you may find that your creditors become more forgiving and open to working together. It’s important to note that removing liens from your property can be a time-consuming process, especially if you have a significant amount of debt.
While working towards debt repayment, it’s possible that you may need to hold onto your house for a longer period than anticipated. However, once your debt is fully repaid, you will be able to proceed with the sale of your property. It’s important to consider that during this time, you may miss out on some potentially advantageous opportunities.
File a Dispute on the Lien
If a lien has been placed on your property that you disagree with, don’t lose hope. You have the power to dispute the lien as long as you have a compelling rebuttal. It is crucial to gather supporting documentation and build a strong case against the creditor.
Acting promptly is key, as you should begin challenging the lien as soon as it is imposed on your home, if not earlier. Ultimately, your goal is to prevent a lien from being placed on your property altogether. Keep in mind that creditors typically have to meet certain requirements before issuing a lien, indicating that they have already conducted their due diligence in determining what they are rightfully owed.
When contesting a lien due to unsatisfactory workmanship by your contractor, it is crucial to maintain meticulous documentation. Keep a thorough record of the commitments made, the actual deliverables, and the expenses incurred to rectify any mistakes.
Additionally, include inspection reports, dates, and photographs as supporting evidence. These measures will bolster your case and ensure clarity throughout the dispute resolution process.
What Can Happen if the Lien Isn’t Resolved
Failing to address certain liens can ultimately jeopardize the security of your home. When liens remain unpaid, creditors have the authority to foreclose on the property, assuming ownership themselves. If you currently have a lien on your house or are facing difficulties in meeting property tax payments, it is crucial to take immediate action. Reach out to your creditors to resolve the situation or consider collaborating with the Awakened Homebuyers team to promptly sell your house. Awakened Homebuyers purchases properties all over Pennsylvania, including areas like Lancaster, Harrisburg, Reading, and more.