Can I Sell My House With a Tax Lien?

Selling a house is always an undertaking, but there are circumstances that make it more complicated. That’s not good when you need to sell your house fast. Things like tax liens can add major wrinkles and make you wonder if you can sell your house at all. We Buy Houses Birmingham is here to demystify the scenario and help you understand your options and obligations. If you do decide you want to sell your home and pay off a tax lien, we buy houses fast for cash.

Can you sell your house with a tax lien? Here’s the full answer.

Technically, Yes

No matter what kind of lien you have on a house, you technically own the property. That means that it is your right to sell or not sell the house. That’s what it means to be an owner, regardless of the debts that might exist.

While that is the short answer, there are a number of exceptions to this rule, so we’ll take the time to explain the most important exceptions and how they work.

It’s Complicated

A lien means that you owe someone money. A tax lien means you owe the government money, and you can rest assured that the government is determined to collect. If you have a tax lien, you can still sell the property, but there are conditions at play that you have to consider.

What Is a Lien

A lien is basically a way for a group or person to call dibs on the proceeds from the sale of a home. In technical terms, it is a claim against the home’s equity. But since you can’t spend a house like cash, the lien only really comes into effect when the house is sold.

A tax lien is a special kind of lien placed against your house by the government. It comes into effect when you miss tax payments. It’s common to have a tax lien if you fall behind on property taxes. It can also happen when you are short on income tax payments.

Regardless, the government puts a lien on your house. It means that if you sell the home, you have to pay what you owe them before you get to pocket any of the money.

Fulfilling Financial Obligations

Here’s where things actually get tricky. You can have liens against your home for a number of reasons. A mortgage is a lien on a home. If you get solar panels, it’s probably financed with a lien. The tax lien is also part of that.

The problem is that it’s possible for the total value of the liens to exceed the value of the house. That’s called being upside down on a property. When this is the case, you can’t just sell your house and pay off the liens. You have to sell your house for enough to cover all of them. When that isn’t possible, you can’t sell the house because you will default on the liens, and that’s not allowed.

Negotiating to Complete a Sale

In the case where the property is upside down, you have to negotiate with lien holders. Basically, you lay out all of the liens. You show the value of the house (you might even have an offer on the house that you can show as part of the conversation). You then negotiate to see if they are willing to settle for less than what you owe in order to get paid at all. Remember, a lien can only be paid through the sale of a house.

Whether or not they agree will depend on each lienholder, but these negotiations are common. Many people manage to sell a house for less than they owe and still settle all of their debts and liens. When the lienholders agree to this, it’s called a short sale. If you need to sell your house fast, negotiating liens can be a major hurdle. Thankfully, We Buy Houses Birmingham can help. We can give you a cash offer for your house right away. You can use that in your negotiations to try to get through the process quickly. Contact us today to get started.