Buying a new home is always exciting. You’re able to upgrade, find the house that best fits your needs in a location you love, and get out of a less perfect house. However, the buying process may not always be as simple as finding the property itself, especially if the property has a lien on the title. While not typically a problem for home buyers, you’ll still want to understand how the lien impacts the property, your offer, and the closing process. Here’s a brief guide to understanding liens from your local Observatory Park realtor.
What is a Lien?
A lien is an indication that the seller of the property owes money outside of the mortgage on the home. These are often assessed when the seller owes taxes to the IRS
or has other outstanding debts unrelated to their tax liability. This debt is something the seller is responsible for and should not be something you, as a buyer, need to worry about when deciding to purchase the property. Keep in mind that if you fall behind on your taxes, fail to pay a contractor for work performed, or fail to make child support payments, a lien may be assessed on the property while you own it. It’s your responsibility to stay in good standing with all of your creditors, whether it’s the government or a private party.
How a Lien Impacts the Buyer
Unfortunately, some liens can be inherited when you buy the home. If the seller has not paid property taxes on the home for the last few years, you’ll be responsible for covering the balance. Similarly, liens for child support payments can create a major problem if you end up buying the home without knowing about the lien. The interested parties can always sue to have the home sold and the funds used to pay them what they’re owed. Though rare, the home can be sold out from under you, leaving you with a mortgage and no place to live.
You can avoid these situations by running a title check on the home before you close. These checks will reveal any liens on the property, the type of liens assessed, and give you an idea of whether or not the property is still a good investment for you and your family.
What Happens During Closing
Most sellers are willing to accept responsibility for the liens and will use the money from the sale to settle the lien. During the closing process, the amount of the lien will be specified in the closing documents, allocating the proper funds to the creditors and mortgage provider. Any funds left over from the sale will become the property of the seller once the buyer submits the payments. However, because there’s always some concern over whether or not the seller will accept responsibility, it’s important to listen to your realtor’s advice throughout the entire process.
Let our experienced realtors help you find the home of your dreams and avoid the hassle of buying a house with a lien on the title. Browse our available featured homes
and give us a call at (303) 579-3566