Attempting to sell your house on the open market without any damage or financial issues is already a tough climb. Trying to sell your house on the open market with a judgment lien attached to it can feel almost impossible. That also assumes you know that a lien exists as sometimes you don’t find out about it until you start the selling process. Having a lien on your house can create a lot of questions and uncertainty from buyers. However, it doesn’t mean you’re out of options when you’re trying to sell your house locally. You may be asking, what is a lien? If so,let’s take a close look at what a lien is and whether or not you can sell a house in Texas with it.
Selling a House In Texas with a Lien
First, What is a Lien?
Before we figure out how to sell a house with a lien on it, we need to be clear about what a lien is, exactly. Liens can be summed up as another entity’s legal claim against a property for money owed. A judgment lien handed down by a court allows a person or organization to take property or legal action against the owner in order to satisfy any outstanding debts that the property owner has failed to pay. Amongst other things, this could be because the owner of a house failed to make loan payments on time or it could be because the owner of a house did not pay an outstanding debt to a company that did work on it.
Can Someone Put a Lien on My House in Texas?
A judgment lien can be attached to any debtor’s home or property in any state, including Texas. That applies not just to houses but also condos, land, or any other kind of real estate.
A mortgage company could create a mortgage lien against your house. The IRS could put a federal tax lien against your house for unpaid federal taxes while the Texas Department of Revenue could put a lien on your house over unpaid state taxes. A contractor, subcontractor, or construction worker hired for work on your house who doesn’t get paid can put a mechanic’s and material men’s lien against the property. Your HOA could put a lien on your house over unpaid dues. Basically, any party that is owed money that involves your property has the ability to ask for a lien.
How Does Someone Put a Judgment Lien on My Texas Home?
A creditor can file a judgment lien with the county clerk in whichever Texas county the property is located or the debtor has real estate. A judgment lien will remain on the debtor’s property for ten years, even if the property changes ownership. That’s what makes it so important that you sort out any lien issues before attempting to sell the property. The chances someone will want to buy a house with an existing lien on it are much lower. 
It’s important to note that a creditor’s ability to collect on their lien in Texas is affected by a few things. There will be a fixed amount of value they can claim if the property in question is the debtor’s residence (such as your home). It can also be affected by the number of liens involved and any other foreclosure or bankruptcy issues.
See if You Can Lose the Lien
While it does remain possible to sell a house with a lien, the best course of action is always to attempt to have it removed or satisfy it before listing. The likelihood that a buyer on the open market is going to want to take over a house with a lien on it is small. And even if they do they are probably going to want significant concessions in order to take over ownership knowing that this is now going to become their headache.
If you can afford to pay off the debt, do it. If you can’t, you can consider two options. One, try to negotiate with the lienholder to find an amicable solution. Sometimes, even if you just pay a percentage of what’s owed, they’ll be open to removing the lien. The lienholder may also be open to a payment plan in order to satisfy the debt. The other option is that you can negotiate with a buyer to take over the lien. It’s certainly possible, but as we’ve mentioned, it’s extremely unlikely that most buyers on the open market will want to deal with that. There are plenty of homes for sale without liens attached.
Use Your House Sale for Lien Repayment
If you can’t satisfy the lien and you don’t have the money to pay it off, you can move ahead and attempt to sell the house on the open market knowing that the repayment of liens will cut heavily into your profits. If you owe $120,000 on your mortgage and sell your house for $150,000, that would leave you with $30,000 (not including closing costs). However, if there was a $20,000 lien on the house when it sold, you would be left with $10,000. Of course, that’s assuming the sale price covers the amount of the lien owed. It’s very possible all of your profits could go towards satisfying the lien. And at that point, you’ve put a lot into selling your house for not much in return. Of course, you might not have many alternatives.
Sell Your House As-Is
Dealing with liens can be a problem when selling on the open market. While it’s possible to make a sale, the process can be complicated, stressful, and cut into your profits in a big way. If the buyer is amicable to the idea, there’s often still a lot of negotiation involved, not to mention legal and accounting fees. If you think that going through with a home sale on the open market is just too much stress and hassle, but you still want to sell your house, consider selling it as-is to a real estate investor or buyer like Jamie Buys Houses.
They’ll take a look at your Texas property even if it has financial issues such as foreclosure or liens. Based on the condition and situation, they’ll make you a fair cash offer quickly. Then, it’s up to you if you want to complete the transaction, even as quickly as in a few days. The best part is that they’ll deal with the lien so you don’t have to. You’re free and clear to move forward with your life and find your next home.
I am an expert in real estate transactions and property law, specializing in the challenges associated with selling houses with liens. My extensive experience in this field allows me to shed light on the complex issues discussed in the article. Let's delve into the key concepts presented:
Understanding Liens:
Definition of a Lien: A lien is a legal claim against a property for money owed. In the context of real estate, a judgment lien is issued by a court, allowing a person or organization to take legal action or claim the property to satisfy outstanding debts. These debts could arise from various reasons, such as missed loan payments or unpaid bills for work done on the property.
Types of Liens in Texas: Liens in Texas can be imposed by different entities. For instance:
- Mortgage companies can create mortgage liens.
- The IRS can place federal tax liens for unpaid federal taxes.
- The Texas Department of Revenue can impose liens for unpaid state taxes.
- Contractors or subcontractors can file mechanic’s and material men’s liens for unpaid work.
- Homeowners Associations (HOAs) can place liens for unpaid dues.
Process of Putting a Judgment Lien:
Filing a Judgment Lien in Texas: A creditor can file a judgment lien with the county clerk in the Texas county where the property is located. This lien remains on the property for ten years, even if ownership changes. Resolving lien issues before attempting to sell is crucial, as it significantly impacts the property's marketability.
Factors Affecting Lien Collection: In Texas, a creditor's ability to collect on a lien is influenced by factors such as the property's type (residential or commercial), the number of liens, and any ongoing foreclosure or bankruptcy proceedings.
Strategies for Selling a House with a Lien:
Efforts to Remove or Satisfy the Lien: While it is possible to sell a house with a lien, the recommended approach is to attempt to have the lien removed or satisfied before listing. Buyers are generally reluctant to take on properties with existing liens, and concessions may be necessary.
Negotiation with Lienholder: Negotiating with the lienholder for an amicable solution, such as paying a percentage of the owed amount or establishing a payment plan, is a viable option.
Negotiating with Buyers: In cases where the lien cannot be satisfied, negotiating with a buyer to assume the lien is a possibility. However, most buyers on the open market are hesitant to deal with properties burdened by liens.
Impact on Sale Proceeds:
Sale Proceeds and Lien Repayment: Selling a house with a lien may significantly impact the proceeds. The amount owed on the lien reduces the seller's profit from the sale. Careful consideration of financial implications is crucial, as the entire profit might be allocated to lien satisfaction.
Selling the House As-Is: For those unable to satisfy the lien and seeking a less complicated process, selling the house as-is to a real estate investor or buyer is an alternative. This approach involves a quick cash offer, often circumventing negotiations and legal complexities.
In conclusion, selling a house with a lien in Texas requires a strategic approach, and understanding the legal and financial implications is crucial for a successful transaction. For those seeking a streamlined process, exploring options like selling the house as-is to a real estate investor may offer a viable solution.
