Selling your home for cash can be a fast and efficient process, but it’s crucial to address any liens and other encumbrances before closing the deal. Liens are legal claims against your property that can affect the sale and handling them properly is essential to ensure a smooth transaction.
There are several different types of liens that could be against your house. First are tax liens. These are liens either from the IRS or The State of Georgia (if you’re in another state obviously the lien would be from your specific state.) If you fail to pay your taxes in a given year, either state or federal tax, then they place a tax lien against your property. Interest and penalties usually accrue. Once it is put against your house, it stays there so it must be addressed to give clean title to the cash buyer you are selling to.
The second type of lien is called a Writ of Fieri Facias, or FIFA for short. A FIFA in the State of Georgia is basically a collection. The collector of a debt has gone in front of a judge and argued their case that you owe the debt. If you do not defend yourself and the judge feels there is sufficient proof that you owe the debt, they will issue a judgment against you. This shows up on a title search as a FIFA and they are enforceable for 7 years. Common examples of these are credit card debt, HOA non-payment, and medical bills to name a few.
Another common type of lien is called a mechanic’s lien. If you’ve ever hired someone to do work on your property and they were not paid in full, they can issue a mechanic’s lien in the amount of the work they performed. This also has to be argued in front of a judge who will issue a judgment against you if they feel that you owe the amount due.
When selling your home to cash buyers, it’s crucial to conduct a thorough title search to identify any existing liens on your property. This search will reveal any outstanding debts, mortgages, or other encumbrances that may need to be addressed before selling. If there are any liens, it’s essential to work with a real estate attorney to understand the implications and find solutions.
Once you’ve identified the liens, you can take steps to satisfy them. This may involve paying off outstanding debts, negotiating with creditors, or using the proceeds from the sale to clear the liens. Working closely with a real estate professional and legal counsel can help navigate this process and ensure that all necessary steps are taken.
In some cases, negotiating with lienholders to reduce the amount owed or set up a payment plan may be an option. This can help minimize the financial impact on the seller while still satisfying the lien and facilitating a clean sale. It’s essential to communicate openly with all parties involved and seek legal advice to protect your interests.
Another area that can cause confusion is if you’ve done any sort of loan modification to your mortgage. During the 2008 financial crisis and during COVID, lenders allowed home borrowers to restructure past due payments to the end of the mortgage. This sometimes shows up as a second mortgage. It’s important to know how your mortgage payoff is stated and if it includes the loan modification if you did one. If you don’t know how much you owe on your mortgage, you may end up selling your house for less than you owe and being responsible for the difference.
Additionally, when selling for cash, buyers may conduct their due diligence to ensure a clear title. Being proactive in addressing liens can make your property more attractive to potential cash buyers and streamline the selling process. Providing documentation that demonstrates the steps taken to resolve any encumbrances can instill confidence in buyers and help facilitate a faster closing.
In conclusion, handling liens and other encumbrances when selling your home for cash requires careful attention and proactive measures. Conducting a thorough title search, working with legal counsel, and communicating openly with all parties involved are essential steps in ensuring a successful and hassle-free transaction. Taking the time to address these issues upfront can ultimately save time and money, allowing you to enjoy a smoother and more straightforward home-selling experience.
