Can I Sell My House With a Tax Lien?
If you have not paid your property taxes for a few years, then your county government will probably place a tax lien on your property. If you forgot to pay your federal income taxes for a while, the federal government will do the same — it will file a lien against your home.
If you have a lien on your property, selling it can be quite challenging. If you are in this situation, there are certain things you should and can do in order to sell your home successfully.
What Is a Tax Lien?
A tax lien is a legal claim against a property when its owner fails to pay taxes. It can affect the property itself, as well as personal belongings, vehicles, business property, and even financial assets. There are several types of liens:
- Property tax liens. They are placed on homes for unpaid property taxes.
- State tax liens. This is a tax lien that is imposed by the state government.
- Federal tax liens. This lien is placed by the IRS if you did not pay your income taxes.
- HOA liens. It is placed if a homeowner does not pay HOA dues.
- Judgment liens. The court places this lien for unfulfilled obligations.
As mentioned above, selling a home with a lien is not easy, but there are some things you can do.
Pay Off the Debt
The best thing you can do is pay off the debt. The sooner you do it, the better. If you cannot do it, here are some options to consider:
- You can try to negotiate the lien in order to find a solution. For example, you can enter into a payment agreement or pay a certain percentage.
- You can negotiate with a home buyer to take over the tax lien.
Remove a Lien
There are several ways to remove a lien. The first thing you need to do is settle the matter with the lienholder. The process of settlement depends on the value of the lien, the type of lien, and the relationship with the lienholder. Sometimes, a lienholder may agree to remove the lien if both parties agree on the payment plan
Dispute the Lien
You may have already paid off the debt, or the tax lien is an error. In this situation, you should hire an attorney who will help you prove that this lien is a mistake. Yes, you will have to pay an attorney fee, but they can help you save thousands of dollars and keep your property sale on track.
Use the Proceeds From the Home Sale to Cover the Debt
If paying off the debt is not an option for you, you can use the proceeds from selling your home. Your realtor will help include the tax lien into the settlement agreement. At closing, your tax debt will be deducted from the proceeds as the seller.
Take Out a Bond
Those who cannot afford to pay off the debt have another option — taking out a bond to cover the cost. Even though it is an expensive option, it acts as the security for the tax lien, so a homeowner can go ahead and sell their home.
Sell Your Home to a Home Investor or Cash Buyer
Unfortunately, selling property with a lien on it the traditional way is not an easy task. Most real estate agents and prospective home buyers consider liens a serious problem and do not want to deal with these properties. Fortunately, there is another alternative way to sell your property — selling your home to a home investor or cash buyer. They purchase homes under different complicated circumstances, including tax liens. Moreover, they also do not require any repairs and can close on the deal within two weeks. If you own a property with a lien in Southwest Florida, and you want to sell your house fast, Real Options & Investments is ready to help. We buy houses in Fort Myers and other surrounding areas. Our mission is to make the home-selling process easy, stress-free, and straightforward. If you have any questions, do not hesitate to visit our website or give us a call.