What Is A Lien And Can You Sell A House With It In NY?

Key Takeaways To Sell A House With A Lien in New York

1. Understand the Impact of a Lien on Your Home Sale. A lien is a legal claim on your property due to unpaid debts and liens can complicate the sale process and deter buyers.
2. Try to Remove or Settle the Lien Before Selling. Pay off the lien in full if financially possible. You can do this by negotiating with the lien-holder for a reduced settlement. payment plans are common to clear the debt gradually.
3. Use Your Home Sale to Pay Off the Lien. The lien amount is deducted from the sale proceeds at closing. If the lien exceeds your equity, you may need to bring cash to closing.
4. Sell Your House As-Is With a Lien Attached. Some investors or cash buyers purchase homes with liens – if you are looking for a fair cash offer for your house with a lien contact Leave the Key Homebuyers. Selling to an investor eliminates the hassle of traditional sales.
5. Work With a Real Estate Professional or Attorney. A real estate attorney ensures legal compliance and negotiates liens. Title companies play a key role in resolving lien issues before closing, so make sure everything is button up with them before closing.

What Is a Lien On a Property in NY?

What is a lien on a house?

Liens are an entity’s legal claim against a property for money owed. A judgment lien handed down by a court allows a person, company, or organization to take legal action against the owner of a property in order to satisfy any outstanding debts that the owner has failed to pay.

For example, this could be because the owner of a house failed to make loan payments on time or it could be because the owner of a house did not pay an outstanding debt to a contractor who made repairs on the house.

Can Someone Put a Lien on My House in New York?

A judgment lien can be attached to any debtor’s home or property in any state, including in New York. That applies not just to houses but also condos, land, or any other kind of real estate. 

There are many types of liens and different entities that can gain them.

• A mortgage company could create a mortgage lien against your house for failure to pay.
• The IRS could put a federal tax lien against your house for unpaid federal taxes.
• The New York Department of Revenue could put a lien on your house over unpaid state taxes.
• A contractor, subcontractor, or construction worker hired to work on your house could put what’s called a mechanic’s and material men’s lien against the property in order to received repayment.
• Even your own HOA could put a lien on your house over unpaid community dues or unpaid assessments.

These are still just some of the examples of potential lien-holders. Any party that is owed money involving your property has the ability to ask for a lien against you. 

How Does Someone Put a Lien on My New York Home?

A creditor can file a lien judgment with the county clerk in whichever New York county the property is located. They can also file the lien in any county where the property owner owns real estate. It’s worth noting that a judgment lien will remain on your property for ten years, even if the property changes ownership. That’s what makes it so important that you sort out lien issues before you sell. The chance that someone will want to buy a house with an existing lien on it is slim compared to homes that do not.

It’s important to note that a creditor’s ability to collect on their lien in New York is affected by some factors. There is a fixed amount they’ll be able to claim if the property in question is your residence. Their ability to collect will also be affected by the number of liens involved, as well as any foreclosure or bankruptcy claims. 

How Long Does a Lien Stay On Your Property in New York?

In New York, a property lien typically stays in place until the debt is paid or the statute of limitations expires. Most judgment liens last 10 years, but they can be renewed for another 10 years. Tax liens and mechanic’s liens have different timeframes depending on the circumstances.

Here’s a breakdown of liens by type:

1. Judgment Liens – court-ordered lien placed on a property due to unpaid debts, lasting 10 years in New York, with the possibility of renewal for another 10 years. It must typically be paid off before selling or refinancing the property.
2. Tax Liens – issued by the government for unpaid property or income taxes, with New York State and federal tax liens lasting 10 years (federal liens can be extended). If unpaid, the government can seize or auction the property.
3. Mechanic’s Liens – filed by contractors or suppliers for unpaid work, typically lasting 1 year in New York but extendable through legal action. These liens can block a property sale until settled.
4. Mortgage Liens – a lender’s legal claim on a property as collateral for a mortgage loan, remaining in place until the loan is repaid or foreclosed. The lender can seize and sell the property if payments are not made.
5. HOA Liens – placed by a homeowners’ association for unpaid dues or assessments, which can accumulate penalties and interest. Unresolved HOA liens can lead to foreclosure or prevent a property sale.

How to Sell a New York House with a Lien

Attempting to sell your house on the open market without any kind of damage or financial issues is already hard enough. Trying to sell your house on the open market with a lien attached to it can feel impossible. That’s especially true if you don’t find out about the lien until you start the selling process and suddenly have to deal with it on top of everything else.

Having a lien on your house can create a lot of questions and uncertainty from buyers who just want an easy process of their own. However, it doesn’t mean you’re out of options when you’re trying to sell your house locally. Let’s take a close look at what a lien on property in NY is and whether or not you can sell a house in New York with one on it.

Try to Lose the Lien

While it is possible to sell a house with a lien attached, the ideal situation is to attempt to have it removed or satisfy the debt before listing. It is very unlikely that a buyer on the open market is going to want to take over a house with a lien on it. There are some real estate investors out there, like Leave the Key Homebuyers who will buy a property with a lien attached, given the right circumstances.

If you can afford to, pay off the debt. If you can’t, you can do one of two things...

First, try to negotiate with the lien-holder to find a solution that works for both sides. Sometimes, even if you just pay a percentage of what’s owed, they’ll remove the lien.

Second, the lien-holder may also be open to a payment plan. Remember that they ultimately just want to get paid, so they might be happy with something instead of having nothing.

Use Your House Sale for Repayment

If you can’t satisfy the lien on property and you don’t have the money to pay it off, you can still move forward with the home sale. Just understand that the profits you make will be used to pay the debt. That’s going to cut into what you make from the sale of the house but at least it solves the problem.

So for example, if you owe $100,000 on your mortgage and sell your house for $120,000, that would leave you with $20,000 (not including closing costs). However, if there was a $10,000 lien on the house when it sold, you would pay that off and be left with $10,000.

That example also assumes the sale price covers the amount of the lien. It’s very possible all of your profits could go towards satisfying the property lien. You might even have to figure out how to pay a little more beyond the profits you make on the house, depending on the debt. At this point, you’ve put a lot of effort into selling your house for nothing to show for it. 

Sell Your House As-Is With a Lien Attached

As you’ve seen, dealing with property liens are a headache. When trying to sell a house with a lien attached sounds frustrating and hard. While it’s possible to make a sale, the process can be complicated, stressful, and cut into your profits in a big way. Even if the buyer is willing to move forward, there’s going to be lots of negotiations involved, not to mention legal and financial fees.

If you feel like going through with a home sale on the open market is just too much stress and hassle, but you still want to sell your house in spite of the lien, consider selling your house as-is to a real estate investor like Leave the Key Homebuyers.

All you have to do is reach out to them and let them know the situation. They’ll visit the property to assess it and consider the financial situation as well. Then they’ll make you a fair cash offer. If you accept, you can close on the house in a matter of days, it’s entirely up to you. With that, you get to hand off the house and they’ll deal with the lien as well as any other issues that come with it. You get cash in your pocket and a chance for a fresh start with a new house.

FAQs for Selling a House with a Lien in New York

1. Can I sell my house if there is a lien on it?

Yes, but the lien must be addressed before closing. Either you pay it off, negotiate a settlement, or sell to a buyer willing to handle it.

2. How do I find out if there is a lien on my property?

You can check with the county clerk’s office, a title company, or hire a real estate attorney to conduct a title search.

In New York, you can check for property liens through the following methods:

• County Clerk’s Office – Visit the clerk’s office in the county where the property is located. Many counties offer online databases where you can search by property address or owner name.
• New York City Department of Finance (For NYC Properties) – Use the Automated City Register Information System (ACRIS) to check for liens in Manhattan, Brooklyn, Queens, and the Bronx.
• Title Company – A title company can conduct a full title search to uncover any liens on the property.
• Real Estate Attorney – Hiring an attorney ensures a thorough lien search and legal guidance on resolving any issues.

3. Can a buyer take over my lien?

In rare cases, an investor or cash buyer may purchase the home and agree to handle the lien, but most traditional buyers will require it to be resolved before purchase.

4. Can I negotiate a lien amount before selling?

Yes, lien-holders may accept a partial payment or a settlement if they believe full repayment is unlikely. Negotiation can help reduce your financial burden.

5. Can I sell my home in foreclosure with a lien?

Yes, but all liens must still be addressed before the property transfer. A short sale or selling to an investor might be an option.