If you have liens attached to your home, you may think it's impossible to sell the property, and you would be right for the most part. Buyers generally shy away from homes with liens on them, because they would be responsible for paying off those debts at some point. However, it may still be possible to transfer the property without paying the lien upfront in some circumstances. Here's what you need to know about this issue.

Buyer Can Assume Responsibility for the Lien

One way you can sell the property without paying off the liens upfront is if you can convince the buyer to take them over. Legally, it isn't necessary to pay off liens to transfer property. So if you can find someone who is will to take over an encumbered property, you can simply sign it over to the individual.

Be aware, though, you will probably receive less money for your home because the buyer will expect a discount for taking over your debt, and you wouldn't be able to accept offers where the buyer requires bank financing. Banks will not finance homes without clear titles, which is why many experts insist you must pay off the liens before you sell the property. The only way you could sell a home to someone with bank financing is if the buyer gives you extra money to pay off the liens before or during closing.

You Can Transfer the Lien to Other Property

Another option for selling a home without paying the lien first is to negotiate with the creditor to transfer the lien to other property. One reason creditors put liens on homes is because the properties are easily accessible. Information about who owns a home is publicly available, unlike other types of property (e.g. vehicles, boats). Thus, it's pretty easy for creditors to verify ownership and attach liens to them.

However, if you have other property that has the same value as the amount of the lien, you can sometimes get a creditor to release the lien on the home and attach it to the other property. For instance, the federal government will release a tax lien on a home and attach it to other collateral if you notify the agency you're selling your house.

It can be challenging negotiating this issue with a creditor; thus, it's a good idea to consult with an attorney for assistance with this issue.

For more information about or assistance with selling a home with a lien attached, contact a real estate agent.

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