Selling a house with liens in Sanford, Florida

 

It’s a common scenario for a house to have liens in Sanford but that does not prevent a homeowner from selling it. Conventional wisdom says that the homeowner just has to come up with the money to pay off the liens before the closing. However, most people can’t so they turn to real estate investors for help.

Key insight: One major reason why real estate investors are ingrained into the fabric of real estate is because they can negotiate with lenders on behalf of the seller to lower what is owed.

 

Did you get the full import of what was just said? Real estate investors can lower the dollar amount for each lien to facilitate the sale of your house. This is not within the job description of a realtor because they would rather take on deals that are typical for the Sanford market. Plus, the training that realtors get to be licensed does not include this area of real estate.

Credit card and medical bill liens are known for being negotiable right before a closing because the claimants would rather get some money than nothing at all. Your real estate investor can even negotiate with the IRS if he is experienced. Should you try this venue be aware that you could be waiting a few months before your real estate investor can successfully negotiate for a lower balance.

Once all of your liens are brought down to their new amount you are ready to come to the closing table. If you are a resident of Florida, your closing will be done at a title company of your real estate investor’s choice (involving an attorney would be an option). Be aware that dealing with an extensive amount of lien payments can prolong the process.

The big question is who pays the money to satisfy the new balances of the existing liens? That depends on the agreement that you have with your investor. You might be bringing some money to the table or nothing at all. Whatever the arrangement, the deal will be structured in a way that is achievable so that it is a win-win situation for both parties.

 

How liens are classified

Depending on who you speak to, liens can be classified in any number of ways. But for our purposes we will put property liens into 2 categories: voluntary (non-judgment liens) and involuntary (judgment liens).

 

Voluntary liens
Mortgage
Heloc (Home equity loan)

Involuntary liens
Medical bills
Credit card debt
IRS tax
Local property tax
Mechanics liens (construction liens)
Code violations

 

If you do have liens in the involuntary liens category it is extremely unlikely that the lien holder will file a writ of execution to foreclose on your house. Instead these liens can just pile up year after year without you even knowing about them. The real problem is when you have a lien in the voluntary category and you are in arrears with your payments. Since you ‘voluntarily’ had those liens placed on your house, they do typically initiate foreclosure after not receiving payments for 3 straight months.

Whatever your case is, if you still own your house and you have liens from either list they must be paid off at the closing table. Unless your real estate investor is taking you through a short sale your mortgage and all other liens must be paid in full.

It’s essential that you work with a real estate investor who is accustomed to the county clerk of courts office of Sanford because the lack of experience and organization can kill the deal. Let’s say that you have 7 liens on your property and your investor has been able to negotiate them all down. At the closing table, the correct paperwork for each lien must be presented so that all debts will be correctly satisfied.

 

The role of title companies

In some states real estate deals are closed at a title company and in other states they are done at an attorney’s office. In Florida either a title company or an attorney can handle your closing. In whatever avenue your real estate investor chooses, it’s important to know that a title company will always be involved at the backend. This work involves identifying all liens that are placed on a property so that it can be transferred ‘free and clear’ to a new owner.

Upon finishing a search for all existing liens a title company will provide you with a title commitment which guarantees that they have found every lien. With this document you can move forward to the closing with peace of mind. Despite this document you will still pay title insurance at the closing table in case the title company misses any liens. This will force the title company to pay any undiscovered liens should they arise after the sale.

At the end of the closing your real estate investor will receive a general warranty deed of your property. This guarantees that all liens have been paid (including the mortgage) before the transfer of property ownership. You may have heard of the term ‘quit claim deed’ where the existing liens are transferred along with ownership. But this kind of deed will most likely not be used unless you are in a divorce or the receiving end of an inheritance property.

 

Should you pay off your liens before the closing?

If you are about to go to closing and you have liens on your property it is not advised to pay the liens off yourself. The reason is because the record of you paying money to a lien holder might not show up in the liens data base for a few weeks. It would be a shame for you to go to closing and not be able to sell because of the lag time between your payment and the population of information.

The real solution is to let the title company pay your liens on your behalf. However, if you are not expecting a closing soon you can simply go to a lien holder directly and pay off the amount owed. In return you will get a letter of satisfaction that you can take to you local county clerk. When that is processed you will get a certificate of release which can be used as proof that you settled your lien with the lien holder.

You as a resident of Sanford have a choice of 2 Seminole County locations if you plan to pay off your liens by yourself.

 

Seminole County Clerk of Courts #1
101 Eslinger Way, Sanford, FL 32773
Phone: (407) 665-4450

Seminole County Clerk of Courts #2
301 N Park Ave, Sanford, FL 32771
Phone: (407) 665-4300

 

IRS Liens

If you have a federal tax lien on your house you can contact the IRS yourself and pay it off. Be aware that you should not plan on selling your house in the next few months because the process could take time.

You might be surprised that you can settle with the IRS if your payments over the years have covered the initial debt that you owed before interest started accruing.

Your quick and decisive maneuvers with the settlement application can bring you into financial freedom. The most important thing is to decide whether to start the process of settlement or just pay it all in full. You really must pick one or the other because picking one option and then choosing the other could waste a lot of time. If your goal is to get rid of the lien to sell your house, you will be unable to sell for a long time (6-8 months).

 

Credit Card Liens

I mentioned before how a real estate investor can negotiate on your behalf to bring down the amount owed on your credit card liens. But you yourself can negotiate as well just as long as your closing is not in the foreseeable future. In this case your essential tool would be the settlement process.

If you choose the settlement option, the best way by far is to ask a company to do this for you. But first you should know the two big sticking points in regards to credit card settlement. The first is that the process can take up to 6 months and the second is that your credit card company can sue you instead of agreeing to a lower balance.

The best option is to just let your real estate investor take care of this issue so you can get your house sale done quickly.

 

Mechanics Liens

Mechanical liens are placed on your property when a contractor does work and is not paid for his services. If you want to dispute a mechanical lien on your home you can file a Section 34 notice which puts a demand on the lien holder to file a suit within 30 days. If this is not done then the lien becomes void. Sometimes the lack of followup to Section 34 notice happens because the lien holder doesn’t feel the legal action is worth the effort. Or maybe the amount owed is too small to fight for.

Mechanics liens are somewhat easy to take care of if the house you are selling is your homestead. You can go through a minor court proceeding and provide documents proving that you live there (drivers license, utility bills). Then the judge will take the lien off your house. This would be done before your closing at the title company.

The unknown side of mechanics liens is that they actually expire. For example, if you have a home in Sanford, Florida that’s had a mechanics lien for more than 1 year, the lien is essentially non-enforceable. But before you can sell your house you need to contact that lien holder to remove it because an existing lien that’s expired is ‘slandering’ your title. If you need to litigate for the lien removal you will surely win the battle because the law is well defined and the lien holder may end up having to pay your attorney’s fees.

 

Code Violations Liens

Code violations will never just disappear, even if your house is auctioned off. If you try to negotiate down a the full payout amount your chances will be slim. But your investor has a better chance of negotiating the payout cost down like the other lien types. You should be aware that if you are living in a strict city like Sanford you will never get a certificate of release for the closing unless they know that the infringing property issue or issues are fixed.

 

Medical Bill Liens

Surprisingly, there is a lot of bargaining potential with your medical bill liens. As your real estate investor already knows, hospitals are willing to settle for much lower amounts than get nothing. For people in a very low income bracket, the path to medical bill forgiveness can be as easy as filling out a form and supplying the hospital with your most recent tax records.

 

Bankruptcy

Avoid this. I’ll just say that up front because the temporary relief a bankruptcy can give you will be overshadowed by years of not being able to buy a house again. You might be in a position where your debts are swallowing you up but if you let the closing process play out you will probably find that the negotiating done on your behalf will save you.

The more equity that you have in the house, the more that can be disbursed to your creditors (at discounted payoff sums). You should understand that if you do opt for the normal chapter 7 bankruptcy you will end up losing your house and will be able to take out all of your equity (if your property is less than an acre). With a chapter 13 bankruptcy you would be able to keep your home but would live a life of severe financial restrictions for 3 years as you make payments to your creditors.

 

Conclusion

If you have liens against your property you can still sell it. But in order to do this successfully you need to work with a real estate investor who is experienced and is willing to negotiate your debts with your creditors. Once all of them have been contacted and agree to lower payouts, you then will be in a position to go to the closing table.

This articles goes into detail about the kinds of liens that you may have and explains how to deal with the corresponding lien holders. Keep in mind that if you try to negotiate yourself, you won’t be able to sell your property as quickly as you might need to. In fact, your involvement might be putting the closing date over half a year into the future.