Can You Sell a Home with a Lien on It in Lafayette, LA? Expert Guidance from Charles Ditch REALTOR®.
“Can you sell a home with a lien on it in Lafayette, LA?”
Yes, you can absolutely sell a home in Lafayette, LA, with a lien on it. A lien is a legal claim on your property for an unpaid debt, and it must be paid off before you can transfer a clear title to the new owner. In almost all cases, the lien is simply paid off at the closing, using the proceeds from your home sale.
That “STOP” Sign on Your Home Sale (And How to Go Around It)
Discovering there’s a lien on your property can feel like hitting a brick wall. You’re ready to sell home, you’re making plans for your next move, and suddenly this complicated legal issue appears. It’s a frightening word that can make you feel like your entire plan is in jeopardy.
I’m Charles Ditch, a REALTOR® with Keaty Real Estate. As a 14-year Army veteran and a UL Lafayette graduate, my entire career has been built on one principle: every complex problem has a strategic solution. A lien is not a “stop” sign; it’s a roadblock that we can navigate with a clear plan and a professional team.
Let’s break down what a lien really is, how we find them, and the straightforward process for resolving them so you can get to the closing table.
What Exactly Is a Lien?
In the simplest terms, a lien is a legal claim or “hold” on your property filed by a creditor (a person or entity you owe money to). It serves as collateral to ensure a debt is repaid.
You cannot sell your home and give the new buyer a “clear title” if there is an active lien. The new owner—and their lender—need to know that the property is theirs, free and clear of any old claims from your creditors. This is why the lien must be “satisfied” (paid off) as part of the sale.
The Title Company’s Role: The Lien Investigator
How do you even know if you have a lien? You might not! This is where a crucial partner in the home-selling process comes in: the title company.
As soon as your home goes under contract with a buyer, the title company (or in some states, a real estate attorney) performs a “title search.” They conduct a deep dive into the public records at the Lafayette Parish Clerk of Court and other databases to find any claims or issues associated with your property.
This search will uncover:
- The history of ownership (the “chain of title”).
- Any outstanding mortgages or loans.
- Any involuntary liens, judgments, or other claims.
If a lien exists, the title search will find it. This is a standard part of the process and gives us the information we need to form a plan, long before your scheduled closing day.
Common Types of Liens on Lafayette Homes
Liens fall into two main categories: voluntary (the one you agreed to) and involuntary (the ones that are often a surprise).
1. Voluntary Lien: Your Mortgage
This is the most common lien of all. When you bought your home, you signed a mortgage, which is a voluntary lien that gives your lender a claim on the property until the loan is paid in full. As we covered in a previous blog, this lien is simply paid off at closing with the proceeds of the sale.
2. Involuntary Liens: The Problem Solvers
These liens are placed on your property without your direct consent, usually as a result of an unpaid debt. Here are the most common types we see in Lafayette Parish:
- Property Tax Liens: If you fall behind on your parish property taxes, the Lafayette Parish Sheriff (who acts as the tax collector) can place a lien on your home. Property tax liens are “superior liens,” meaning they get paid before almost any other debt.
- Mechanic’s Liens: This is a very common one in Louisiana, which has strong laws protecting contractors. If you hired a roofer, a plumber, or an AC company to do work on your home and then had a dispute and didn’t pay them, they can file a mechanic’s lien.
- Judgment Liens: If you lose a lawsuit (for example, from a car accident or a credit card debt) and a court awards someone monetary damages that you don’t pay, the creditor can “attach” that judgment to your real estate, creating a lien.
- HOA Liens: If you live in a planned community or subdivision with a Homeowners Association (HOA), like River Ranch, and you fail to pay your dues, the HOA can file a lien on your property.
- IRS or State Tax Liens: If you have a significant unpaid balance on your federal or state income taxes, the government can file a lien against all your assets, including your home.
How to Resolve a Lien When You Sell: A Simple 3-Step Strategy
So, the title search finds a lien. What happens next? You don’t need to panic or scramble to find cash. The process is usually very straightforward.
Step 1: Identify and Verify the Lien
The title company will issue a “title commitment” showing the lien, the creditor, and the amount. Our first step is to verify it. Is this debt truly yours? Is the amount correct? Mistakes in public records can and do happen. We may need to get a “payoff statement” from the creditor to confirm the exact amount owed.
Step 2: Determine Your Equity
This is a simple calculation. We look at the contract price your home is selling for and subtract what you owe. (Sale Price) – (Mortgage + Lien + Estimated Selling Costs) = Your Net Proceeds Thanks to the strong, resilient home values in the Lafayette market, most sellers have more than enough equity to cover all their debts and still walk away with a significant profit.
Step 3: Pay the Lien at Closing
This is the most common solution. You don’t have to pay the lien before you sell. Instead, the title company acts as the financial manager for the transaction. On closing day, they use the proceeds from your sale to:
- Pay off your primary mortgage.
- Pay off the lien(s).
- Pay the other closing costs (commissions, title fees, etc.).
- Give the remaining profit directly to you.
The lien is simply another line item on your final settlement statement. It’s a clean, efficient process that ensures the debt is paid and the buyer gets a clear title.
What If the Lien Is a Surprise or Disputed?
This is where having a strategic, level-headed REALTOR® on your side is critical. If a lien pops up that you weren’t aware of, or one you believe is invalid, we don’t panic. We get to work.
- If the Lien is Disputed: You may believe you already paid the debt, or that the contractor filed the lien improperly. In this case, my role is to coordinate with the title company to understand exactly what documentation they need to “clear the title.” This may require you to provide proof of payment or, in complex cases, to consult a real estate attorney. My promise of “Passion and Honesty” means I’ll give you a straight answer and connect you with the professionals you need.
- What If I Don’t Have Enough Equity? This is a rare situation known as a “short sale,” where the total debt on the home is more than its market value. A short sale is a complex negotiation with your lenders to accept less than what is owed. It is a difficult path, but it is not impossible. I have the experience to guide you through that process as well.
A Lien Is a Problem, Not a Dead End
A lien on your home is a serious financial and legal matter, but it is almost never the end of your home sale. It is a logistical problem that requires a clear-headed, strategic solution. My 14 years in the Army were all about assessing a challenge, building a plan, and executing the mission. Your mission is to sell your home, and my job is to help you clear any obstacles in the way.
Don’t let the fear of a potential lien stop you from exploring your options. The very first step is to understand what your home is worth in today’s Lafayette market. That number is the key to understanding your equity and your power to resolve any issues that may arise.
Are you concerned about a potential lien on your property? Or do you just want to get a clear, confidential assessment of your home’s value and your potential net proceeds? Contact Charles Ditch, REALTOR® today. Let’s build a clear, strategic plan for your successful home sale. Call me at 337-501-9467 or visit my website to get started.
Disclaimer: The information in this article is for general informational purposes only and is not intended to provide specific legal or tax advice. A lien is a legal instrument, and you should consult with a qualified Louisiana real estate attorney or tax professional for advice on your specific situation. All real estate services are provided in strict adherence to the Fair Housing Act and the ethical standards of the National Association of REALTORS®.
