A lien is a legal claim against your property that gives a creditor the right to collect what you owe. The lien follows the property, not the person — which is why it must be resolved before (or during) any sale. The good news: nine times out of ten, liens are paid off directly from the sale proceeds at closing. You don't need to come up with the money out of pocket beforehand.
This guide covers every type of lien you might encounter, the exact order in which lienholders get paid, and five strategies for resolving liens so you can close your sale. Full selling timeline →
7 Types of Property Liens
Mortgage Lien (Voluntary)
StandardEvery homeowner with a mortgage has this lien. It's voluntary — you agreed to it when you borrowed the money. At closing, your mortgage is paid off from proceeds first (after property taxes). This is the lien that's supposed to be there.
Impact on sale: None — this is normal. Your title company handles payoff automatically. If you owe more than the home is worth, see our underwater mortgage guide.
Property Tax Lien
Highest PriorityIf you fail to pay property taxes, the government places a lien on your home. Tax liens supersede all other liens — they get paid first, before your mortgage, before any judgment. If unpaid long enough, the government can sell your property at a tax sale, and both you and your mortgage lender lose your interest in the home.
Impact on sale: Must be paid at or before closing. Typically deducted from proceeds automatically. If your county has already sold the tax lien to an investor, you'll need to pay the investor (plus interest and penalties) to get a release. Complete property tax guide →
IRS Federal Tax Lien
Federal PriorityIf you owe unpaid federal income taxes, the IRS can file a Notice of Federal Tax Lien against your property. Because it involves the federal government, this lien can be difficult and time-consuming to resolve. A federal tax lien doesn't prevent you from selling, but the IRS must either be paid from proceeds or formally discharge the property from the lien.
Impact on sale: The IRS has 45 days to respond to a discharge request (IRS Form 14135). Plan for 4-8 weeks minimum. The IRS may accept partial payment if you can demonstrate the sale benefits the government. A tax attorney is highly recommended. State-specific guidance →
Mechanic's Lien (Construction)
Varies by StateContractors, subcontractors, or suppliers who weren't paid for work on your home can file a mechanic's lien (also called a construction lien or builder's lien). This typically happens 60-90 days after payment is due. In some states, mechanic's liens can take priority over mortgages — meaning the contractor gets paid before your bank.
Impact on sale: Title companies won't close until the lien is resolved. Options: pay the amount owed, negotiate a settlement (often 60-80% of the claim), contest the lien in court if invalid, or request a lien release. Common tip: Always get lien waivers from contractors during and after work to prevent this.
Judgment Lien
Court-OrderedWhen you lose a lawsuit and the court awards money to the other party, they can file a judgment lien against your property. This includes unpaid credit card judgments, personal loan defaults, business debts, and civil lawsuit damages. You may not even know about it until a title search reveals it.
Impact on sale: Must be paid or settled before closing. You can negotiate with the creditor — many will accept 40-70% of the judgment amount for immediate payment from sale proceeds. Selling with a judgment lien may require court approval in some states. A real estate attorney should handle this negotiation.
HOA Lien
May Have Super LienHomeowners associations can place liens for unpaid dues, special assessments, and fines. HOA liens can escalate quickly — and in some states, HOAs have "super lien" priority that places them ahead of your first mortgage for a portion of the debt (typically 6-12 months of unpaid dues). HOAs in some states can even initiate foreclosure while your mortgage payments are current.
Impact on sale: Request a payoff/estoppel letter from your HOA. This shows the exact amount owed. Pay from proceeds at closing. Budget $50-$200 for the HOA transfer/resale package fee as well.
Child Support / Alimony Lien
Court-OrderedIf you owe unpaid child support or alimony, a lien can be placed against your property by the state's attorney general office or your former spouse through court action. These liens remain until the support obligation is fully current, the obligation ends, or the former partner agrees to remove it.
Impact on sale: May require court approval to sell. The lien amount (arrears) will be paid from proceeds. Getting current on payments before listing makes the process smoother. Divorce house sale guide →
Lien Priority Order
Payment Order at Closing
When your home sells, the title company disburses proceeds in this order. If money runs out, lower-priority lienholders don't get paid.
Property Tax Liens
Always first. Supersedes everything, including federal tax liens.
First Mortgage
Your primary lender. Paid off automatically from proceeds.
IRS Federal Tax Liens
Federal government claims. May require formal discharge process.
Mechanic's Liens
Priority date varies by state. Some states place above mortgage.
Second Mortgage / HELOC
Junior lien. Gets remaining proceeds after first mortgage.
HOA Liens
Super lien priority in some states for 6-12 months of dues.
Judgment Liens
Court-ordered. Negotiable — creditors often accept 40-70%.
Child Support / Alimony
May require court approval. Arrears paid from remaining proceeds.
Priority order varies by state. Some states give HOA liens "super priority" above first mortgages for a limited amount. Mechanic's lien priority depends on when work began vs. when other liens were recorded. Consult a real estate attorney for your specific state's rules.
Lien Payoff Calculator
Net Proceeds After Liens
5 Ways to Clear Liens
1. Pay From Sale Proceeds (Most Common)
In most cases, this is how it works. You sell the home, and the title company automatically deducts lien amounts from your proceeds before wiring you the remainder. You don't need to come up with cash beforehand. The title company handles all payoff letters and disbursements. This works for roughly 90% of lien situations. See how closing costs + liens get deducted →
2. Negotiate a Settlement
Creditors — especially judgment lien holders — often accept less than the full amount. If a creditor filed a $20,000 judgment, they may accept $10,000-$14,000 for immediate payment from closing proceeds. Why? Because collecting through other means (wage garnishment, additional lawsuits) is slow and expensive. Your attorney or title company can negotiate on your behalf. Always get the settlement agreement in writing before closing.
3. Contest Invalid Liens
Not all liens are valid. If a contractor filed a mechanic's lien for work you didn't authorize, or a creditor filed a lien with the wrong amount, you can contest it. This requires a quiet title action or a motion to satisfy/release the lien in court. If the lienholder can't "perfect" (prove) their claim, the lien gets dismissed. This takes 4-12 weeks but can save you thousands on an invalid or inflated claim.
4. Request IRS Discharge
For federal tax liens, you can request the IRS discharge the property (remove the lien from this specific property while the debt remains). File IRS Form 14135 (Application for Certificate of Discharge). The IRS has 45 days to respond. They'll approve if the sale benefits the government — i.e., they'll receive a portion of proceeds that they wouldn't get otherwise. A tax attorney makes this process significantly smoother.
5. Sell to an Experienced Buyer
Cash buyers and investors routinely purchase homes with liens and title issues. They understand the process, have attorneys on staff, and can navigate complex title situations that would derail a traditional sale. Our partnership model handles lien resolution as part of the transaction — we work with lienholders, coordinate payoffs, and close on your timeline. Learn about our partnership approach →
How to Find Liens
Many sellers discover liens for the first time during the title search — which can delay or kill a deal. Search proactively before listing to avoid last-minute surprises:
Title Search ($75-$200)
The most comprehensive method. A title company searches all public records — county recorder, court records, tax records — for any claims against your property. This is required during any sale, but ordering one early gives you time to resolve issues. Title insurance costs explained →
County Recorder / Online Property Records
Most counties have online portals where you can search property records by address or parcel number. Look for recorded liens, judgments, and encumbrances. Free but may not catch everything (especially IRS or out-of-county judgments).
Court Records + IRS Transcript
For judgment liens, check your county's court records or online case search. For federal tax liens, request an IRS transcript (IRS.gov or call 1-800-829-1040) or search the county recorder where IRS files Notice of Federal Tax Lien.
Frequently Asked
Yes. Most liens are paid from sale proceeds at closing. If liens exceed equity, you'll need to bring cash, negotiate settlements, or pursue a short sale. Cash buyers routinely handle homes with liens.
Generally: (1) Property tax liens, (2) First mortgage, (3) IRS federal tax liens, (4) Mechanic's liens, (5) Second mortgage/HELOC, (6) HOA liens, (7) Judgment liens, (8) Child support/alimony. Priority varies by state — some give HOA liens "super priority."
Four ways: title search ($75-$200, most comprehensive), county recorder's online records (free), court records for judgments, and IRS transcript for federal tax liens. A title search is required during any sale. Search proactively to avoid closing delays.
Options: negotiate settlements with lienholders for less than full amount, bring cash to closing, pursue a short sale (lender approval required), or work with an experienced cash buyer. A real estate attorney is essential. Underwater mortgage guide →
Property tax: 1-2 weeks. HOA: 1-2 weeks. Mechanic's: 1-4 weeks. Judgment: 2-6 weeks. IRS federal: 4-8 weeks. County recording of the release adds additional days. Search and resolve proactively to avoid delaying your closing.
Lien priority rules are governed by state law and can vary significantly. This guide presents the general priority order recognized in most jurisdictions, but specific rules — particularly regarding mechanic's lien priority dates, HOA super liens, and IRS lien subordination — differ by state. IRS discharge process per IRS Publication 783 and Form 14135. Mechanic's lien filing deadlines typically 60-90 days after payment due date per state statute. HOA super lien statutes exist in approximately 20 states. Judgment lien settlement percentages (40-70%) based on industry data from Clever Real Estate and HomeLight agent surveys. Title search, lien resolution, and payoff processes are standard real estate closing procedures managed by title companies or closing attorneys. This guide is educational — consult a real estate attorney and title company for your specific situation.