If you’re thinking about selling your house, one of the things you need to find out is if you have a clean title. This means you are looking to see if there is a lien on your property.
It is not uncommon for homeowners to think that they have a clear title when in reality there is a lien on it. Having a lien on your title can be a deal-killer when trying to sell your house. And, that’s why you want to start early in the process of checking the title before listing your house.
This way, you will have time to make any corrections before the house goes on the market.
A lien is simply a legal notice that is attached to the title of your property. It indicates that there is an unpaid debt related to your property. Most of the time you will be unable to refinance or sell your property if there is an existing lien.
There are several different kinds of liens that could be on your property:
Tax lien – If you have failed to pay your property taxes or federal taxes then you may have a tax lien on your property. This lien can only be removed by paying your unpaid tax amount.
Mechanical lien or contractor lien – This type of lien is put on your house if you owe money to a contractor that has performed work. This includes home improvement projects that have been completed. It is a way for the contractor to ensure that they are paid.
Judgment liens – If a court has determined that you owe money to another party and you are unable to pay it they could put a lien on your property. This could include money that you owe for child support, medical bills, or unpaid credit cards debt.
It is easy to check if you have a lien because they are public record. It is free to search for a lien, but you may have to pay in order to get a copy of the report showing the details of the lien.
Another option is to hire a title company to do the work for you. While you will pay for the service it usually comes with a guarantee that they have completed the work. That means if a lien is later found the title company takes responsibility.
If you see that there is a lien on your property your first step is to find out the details. It could be that it is still on your property by mistake. This can often happen with mechanical liens when a contractor has been paid but has not done the legwork of removing the lien.
In this case all you need to do is submit proof that the debt has been paid. However, if there is a current lien on your house you will need to settle the debt in order to remove the lien.
If you are considering selling your house you should do a search to see if there are any liens on your property. If you don’t discover this until you have a buyer and are in the process of closing, it can actually cost you the deal on your house.
Some buyers do not want to go through the process of waiting for you to remove the lien or they may be afraid of having to deal with it on their own. Most real estate deals have a contingency for a clear title and if this is not in place your buyer can walk away. Don’t risk a future deal by not checking your title now.