- Taub and Bogaty
What is a Lien?
Many of us have fallen on harder times due to the lingering pandemic and have been forced to make tough financial decisions like choosing food and heat over property tax payments. Many people bought houses pre-pandemic that they now cannot afford to keep up due to the unforeseen consequences of forced stay-at-home orders and job loss, leading to homeowners looking to sell but unsure if it's possible with liens on the property. The simple answer is yes, but hiring an experienced real estate attorney is far more advisable than trying to handle it yourself.
What is a lien?
"A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee, and the person who has the benefit of the lien is referred to as the lienor or lien holder."
A lien on a home is a claim to that property by an entity or person (the lienor) the homeowner (the lienee) Is indebted to and is commonly used in collateralized debt arrangements. If the lienee defaults on the mortgage and the lender foreclose, that property's lienor may be entitled to some or all of the proceeds in repayment.
A mortgage is a voluntary type of lien, being that it is a loan used either by purchasers of real property to raise funds to buy real estate or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged.
Multiple types of involuntary liens can be levied against property, such as Tax Liens; whereby the local or federal government places liens on homes and property when the lienee fails to pay property taxes; Judgment Liens; where creditors can choose to file with the court for a judgment lien if a debt has not been paid, similar to an Equitable Lien, to name only a few.
Whatever the type of lien, steps must be taken before you can sell a home with one, including getting the title company to ensure those liens are satisfied at the time of sale. The lien is usually paid off through the sale, and the seller doesn't have to scrape up the money to pay out-of-pocket.
Real Estate Attorneys Do the Heavy Lifting
All this is to say that selling a home with a lien is possible and can benefit both the lienee and lienor, but it is also complicated and time-consuming. The most sensible course of action in such cases is to hire experienced real estate attorneys to wade through all those details for you. Although some states, like New York, require an attorney to be present at closings, others require a lawyer to review the title, and some states don't require an attorney at all, it is advisable to hire one when dealing with any sale that isn't straightforward.