Selling a House with a Tax Lien in New York

Tax issues can cause a lot of stress when it comes to your finances and make it more complicated to sell your New York home.

Several types of liens may be placed on your residence for delinquent payments, the tax lien being the most common and challenging to clear. 

A tax lien by the IRS is definitely one that can cause concern, but don’t worry, you do have options to get out of it. 

The good news is, selling a house with a tax lien in NY is possible, that is, if you work with the right professionals. Below is a wise guide to everything you need to know about tax liens and selling a house with one, so you’ll be ready to handle this situation. 

Selling a House with a Tax Lien in New York

Selling a House with a Tax Lien in New York

Honestly, selling a house in NY, in general, isn’t the easiest task, add the fact that you have a lien against your home, and the process becomes a bit more complicated. But have no fear, we’ll walk you through the process, explain the situation, and provide some solutions for you to get out of this sticky spot. 

What is a Property in Lien?

A good place to start is to define what a property lien is precisely. Basically, a property lien is a legal claim on an asset (i.e., your house) that allows the holder to obtain access to the property if debts owed are not paid. For the lien to be approved, it must be filed with the county records office or a state agency. Once that’s completed and authorized, it is delivered to the property holder with specific terms notifying the person that action has been taken to repo a piece of property. 

Besides a house, property liens can be placed on cars, boats, and equipment. But liens are placed on the property as a final step for a creditor to collect unpaid debt. 

There are several different types of liens that can be placed on a property, including:

  • Materialman Lien for unpaid contract work on a home
  • Homeowners Association (HOA) Lien on outstanding dues or for rule violations
  • Department of Revenue Lien
  • IRS Lien

Related Article: 4 Options When Facing Back Property Taxes in Nassau or Suffolk County, NY

What is a Tax Lien? 

We all have to pay taxes, but if you were to accidentally forget or just fail to pay, it could cause a tax lien to be placed against you. A tax lien is a claim made on your house from either the IRS or state, local or federal government because you failed to pay your property or income taxes. Until that debt is paid, you won’t be able to sell or profit from your home’s equity. Tax liens are pretty severe, whether you failed to pay state or federal taxes, you’ll more than likely need to get an attorney and CPA involved to resolve a tax lien. 

Tax Lien Laws in New York

Tax liens are a big deal. So as soon as you’re aware of the issue, it’s essential to address the lien right away, and here’s why. If you own a New York home and let your property taxes become delinquent, you could lose the home to a tax foreclosure. Not only could you lose your house, but you could also have a foreclosure on your credit report. 

However, the good news is that New York law does let you “redeem” it (maintain ownership). But to redeem the property, you’ll have to pay the amount of the delinquent tax lien or liens, including all charges authorized by law before the redemption period expires. However, if you were not to redeem the property, your home will be sold in an auction, or the tax district will obtain ownership of the property through the foreclosure process

Related Article: Taxes on Selling a House in New York: What are the Taxes to Sell My Home?

Can You Sell a Property in Lien in New York?

The burning question: can you sell a property in lien in New York? Yes, you can! Of course, the specific details matter and require a trained eye, but yes selling a house with a tax lien is possible. But that doesn’t go without saying, it does come with its challenges. There are financial obligations and plenty of red tape to maneuver around before you can even think about listing the house. And that’s assuming you can get those issues resolved in a timely manner. 

How to Sell a Property in Lien in New York

There are several ways you can go about selling a property with a lien. You can try to do it on your own, meaning- sell your house without a realtor, or you can hire a real estate agent to list and sell your home. However, in most cases, the process is long, stressful, complicated, and mentally and financially draining. 

Whether it’s the HOA, the government, or your bank, all these parties have the power to prevent you from selling your house with a tax lien. 

Ultimately, these organizations all want to get paid what is owed, so they also have the power to sell the property to compensate for the debt owed to them. To remove a lien against your property and move forward with your home sale, the debt owed must be paid. 

After the debt is resolved, a Letter of Satisfaction is issued by the persons or party that filed the lien against the property. Sadly, creditors know that most homeowners don’t understand their rights and aren’t aware they can resolve the lien besides paying for it out of pocket. Below are a few of the options available to resolve your lien. 

Use House Sale for Repayment

It may seem the only way around selling your house with a lien is to pay off the lien before listing. But you may be able to talk to your creditors about using the home sale as repayment. At the closing, you could arrange for the amount owed to be deducted from your profits and paid directly to the owed persons to resolve the lien. However, the only issue is that even if you’re able to get the creditor on board with this idea, you may have trouble finding a buyer willing to purchase a house with a lien. Most buyers don’t understand liens and may cause the purchase agreement to fall apart. 

Sell House to Cash Home Buyer

Another option is to sell your house to cash home buyers in New York. When dealing with liens, you want to work with someone who is knowledgeable about your current situation. Companies that buy houses in Brooklyn and other cities in NY have experience with tax liens and purchase properties with liens. 

They’ll work with you to resolve the issue and purchase your house quickly, regardless of the liens against the property. But besides that, there are several benefits of accepting a cash offer for your house

Sell House to Cash Home Buyer

Paying off a lien can affect your profits but so can paying realtor commissions. When you work with a cash home buyer like Leave The Key Homebuyers, they don’t charge agent fees when buying your house. 

Another benefit to selling to Leave The Key Homebuyers, they can make you an offer for your home within 24-hours and close in as little as 7-days. So if you need to move quickly to avoid a tax foreclosure, take a new job, or prevent months of sitting on the market, you can sell your house quickly and avoid the headache. 

Sell House As-Is with Lien Attached

If the home you’re trying to sell has unfinished construction, water damage, a leaky roof, or any number of other major repairs, you may be in a bit of a bind. You might be asking yourself, “how am I supposed to address these expensive but necessary repairs and pay off a tax lien?” An option you may not know is available is to sell your house as-is with the lien attached. 

Here is the downside though- usually, to successfully sell a house, it needs to be in good condition to attract buyers, pass buyer inspections, and will need to have a clear title. So you’ll need to find a buyer willing to take on whatever condition your house is currently in and understand the lien situation you’re trying to resolve. 

The average home buyer may see this as too much of a challenge but Leave The Key Homebuyers wouldn’t. Another benefit to working with a cash home buyer is that they buy houses in as-is condition- even more reason why working with a company that buys houses would be a better option.

Final Takeaways 

Having a tax lien on your New York property can be stressful, especially if you don’t know where or how to come up with the money to pay for it. But as you’ve discovered, you do have several options, and selling your property with a lien is possible. However, working with knowledgeable real estate professionals in NY is essential to help this run smoothly, pay off the lien, and move on to bigger and better things. Whether you need to “sell my house fast Long Island,” Queens, or Brooklyn, Leave The Key Homebuyers is here to help. Feel free to contact them and get a cash offer for your house today

The information provided in this article does not, and is not intended to, constitute legal advice, instead, all content, information, and materials available in this article are for general informational purposes only.

A Wise Guide on Selling a House with a Tax Lien in New York