How do you sell your home if it has a judgement or lien?
Can you sell your home if you have a judgement? If so, how can you do it? Who will buy it?
There can be many quirks in trying to sell a home today. One of the sneaky ones which have often derailed real estate closings at the last minute and have caused many foreclosures are judgements being attached to properties.
These are debts which are added to the amount which needs to be paid off on the sale of a property in addition to any mortgage balance you have. Not all homeowners are aware of these judgements or that they are attached to their homes. Even those that are may not always realize the impact on trying to sell. At least not until the last minute when it kills their closing.
This is often because the seller ends up having to come to closing with money to just get rid of the property and debts. Or because it can mean the buyer has less equity than they thought, and will owe that after they buy. Or because some liens can actually prevent the transfer of title and ability to insure title.
So, even if you have had a house sale fall apart before, how can you sell your home?
Common Types of Judgements & Liens
When talking about ‘judgements’ most people are talking about debts that have been awarded to another party in a court by a judge. For example; you didn’t pay your credit card bills or were found guilty of ripping off a business partner, not paying a commercial loan back or were at fault in an accident.
Not all states allow these types of judgements and debts to be attached to personal residences. Some may. However, there are many other types of judgements, debts and liens that may be attached to your property.
Common ones include:
- Utility liens
- IRS liens
- Property taxes
- Second and third mortgages and lines of credit
- Mechanics and contractor liens
- Some types of grants for homeowners
- City code violations
- Attorneys fees in a foreclosure
- Point of Sale conditions required by cities
- HOA and condo dues and special assessments
- Prepayment penalties
Again, some of these are simply debts that need to be paid off at closing from the seller’s proceeds before a transfer is complete. Others can actually prevent a sale and the buyers from obtaining title insurance and a mortgage loan. Some may need to be settled in advance. Or the buyer must be willing to take on these additional debts.
The Keys to Selling a Home with Judgements or Liens
- Find Out How Much You Owe
If possible, find out how much you owe upfront. This definitely helps avoid surprises, gives you a more accurate estimate of what you’ll net in a sale, and avoid roadblocks. You can request payoffs from lenders and creditors, and have a title company perform a lien search.
2. Find a Buyer Willing to Take it on
Often you may not have the cash to pay off judgements and liens before the closing. You may not even be able to sell for enough to cover all the judgements and liens. You probably don’t want to gamble on taking on more debt or betting your last savings or retirement money on settling extra debts or making improvements with just a hope of being able to sell. So, you may have to be more transparent about the challenges upfront, and look for a buyer willing to take on these debts and challenges themselves. This isn’t going to be your average home buyer. It will probably need to be a professional investor.
3. Find a Buyer that has the Experience
If the numbers just don’t work as they are or there are code violations and permit problems which need to be solved you need a buyer who is not only willing to take them on, but who has the experience in negotiating with creditors and the city and knows how to get them solved or has an attorney or title company who can do it.
4. Request Cash Offers for Your Home
Hop online and request purchase offers from cash buyers and investors who don’t need a mortgage loan and who are used to dealing with situations like these.