Selling a House With Liens in California: What Homeowners Should Know

Selling a House With Liens in California

Discovering that a lien is attached to your property can complicate a home sale, but it does not necessarily mean the property cannot be sold. Liens can arise from unpaid taxes, court judgments, contractor disputes, government assessments, unpaid obligations, and other circumstances.

If you are considering selling a California property with a lien, understanding what is recorded against the property and how it may affect the sale is an important first step.

What Is a Property Lien?

A lien is a legal claim or encumbrance that may be attached to real property. Depending on the type of lien, it may need to be paid, released, resolved, or otherwise addressed before a buyer can receive the title required for the transaction.

Liens can vary considerably, so homeowners should determine exactly what has been recorded against the property rather than assuming every lien will be handled the same way.

What Types of Liens Can Affect a California Property?

A property may potentially be affected by several types of liens or recorded obligations, including:

• Property tax liens
• Federal or state tax liens
• Judgment liens
• Mechanic's liens
• HOA liens
• Child or spousal support liens
• Municipal or code-enforcement liens
• Other recorded judgments or assessments

The amount owed, lien priority, expiration rules, and requirements for releasing a lien depend on the particular situation.

Can You Sell a House With a Lien on It?

In many situations, a property can still be sold even when a lien exists. However, the lien will generally need to be evaluated during the transaction because it may affect the seller's ability to transfer clear title.

A title company or other qualified professional can research the public records and identify liens or other recorded matters affecting the property.

Can a Lien Be Paid From the Sale Proceeds?

Depending on the type of lien and the circumstances, some liens may be resolved through the closing process using proceeds from the sale. The amount necessary to satisfy the lien may be deducted before the remaining proceeds are distributed to the seller.

Other situations can be more complicated and may require negotiations, payoff demands, releases, legal assistance, or action by the lienholder before closing.

What If You Didn't Know About the Lien?

Sometimes homeowners discover a lien only after they begin preparing to sell. This can happen with older judgments, contractor disputes, tax obligations, or issues involving a previous owner or family member.

Finding the lien early can provide more time to determine whether it is valid, obtain a payoff amount, or identify what must be done to clear the title.

What If the House Also Has Code Violations?

Some properties have both recorded liens and unresolved code-enforcement issues. Depending on the jurisdiction, fines or assessments associated with code violations may affect the property or the sale.

Read our guide to selling a house with code violations in California for more information.

What If the Property Was Inherited?

An inherited house may have liens or debts that the heirs did not know existed. A title search during the sale process may reveal judgments, tax liens, mortgages, or other recorded obligations.

If you inherited the property, you can learn more about selling an inherited house in California.

What If the Property Is in a Trust?

Trustees may also discover liens or other title issues while preparing a trust-owned property for sale. The trustee may need to determine how those obligations should be handled before proceeds can be distributed to beneficiaries.

Learn more about selling a trust property.

What If the House Needs Major Repairs?

A property with liens may also need substantial repairs. Owners sometimes face the difficult decision of whether to spend additional money repairing the property while also dealing with outstanding obligations.

Our guide to selling a house that needs major repairs in California explains some of the options available to property owners.

Traditional Listing vs. Selling As-Is

Homeowners may choose to resolve title issues and prepare the property for a traditional listing. Another option may be a direct sale to a buyer willing to purchase the property in its current physical condition.

A direct sale does not automatically eliminate a lien. Any lien or title issue still needs to be properly addressed as part of the transaction.

You can learn more about how the All Cash Baby home-buying process works.

All Cash Baby Buys Houses With Complicated Situations

All Cash Baby purchases qualifying properties throughout Southern California, including houses involving repairs, inherited-property issues, trust sales, code problems, and other complicated circumstances.

If a property has liens or title issues, those matters can be reviewed during the transaction to determine what may be required before a sale can close.

We purchase properties throughout Los Angeles County, Orange County, Riverside County, and San Bernardino County.

Get a Cash Offer for Your Property

If you own a Southern California property with liens or other title issues and are considering selling, contact All Cash Baby. We can discuss the property and determine whether a direct cash purchase may be an option for your situation.

There is no obligation to accept an offer.

This article provides general information and is not legal, tax, title, or financial advice. Liens and title issues vary considerably. Property owners should consult a title company, attorney, tax professional, government agency, or other qualified professional regarding their individual circumstances.