Owning a home in California is a major financial investment, but it also comes with legal and financial responsibilities. One of the biggest obstacles homeowners face when trying to sell or refinance is a lien on a house. Liens create legal claims against a property due to unpaid debts, preventing homeowners from making financial decisions without first resolving them. Osborne Homes specializes in helping homeowners who need to sell and move out fast, even when liens are involved.
This article explains what liens on houses are, the types of liens in California, and who can put a lien on your house in California. Whether you’re dealing with tax debt, contractor disputes, or legal judgments, understanding liens is essential for protecting your home and your financial future.
What You Need to Know About Liens on Houses
So, what is a lien on a house? A lien on a house grants a creditor legal rights over a property due to an unpaid debt. Until the lien is cleared, homeowners may be unable to sell, refinance, or transfer ownership. These restrictions can be especially difficult for homeowners who need to sell quickly or access home equity.
Voluntary vs. Involuntary Liens
Some liens are voluntary, such as mortgage liens, where the homeowner willingly uses the home as collateral. Others, like tax liens and judgment liens, are involuntary and result from outstanding debts. These involuntary liens can be challenging to resolve and may lead to legal action.
Restrictions on Home Sales
Selling a home with a lien often requires clearing the debt first. Creditors have a legal claim, and without settlement, they can block the sale or claim the proceeds.
Options for Removing Liens
Homeowners can pay off the debt, negotiate a settlement, or take legal action to dispute an invalid lien. If unresolved, liens can last indefinitely and even be transferred to new owners.
Types of Liens in California
Different types of liens in California impact homeowners in various ways. Some are tied to unpaid taxes, while others result from legal disputes or home improvement work. All liens on houses must be addressed before a home can be sold with a clear title.
Tax Liens
Local, state, or federal tax agencies can place liens on a home when a homeowner fails to pay income or property taxes. These liens take priority over most other claims and must be resolved before a sale can proceed.
Mechanic’s Liens
Contractors, electricians, plumbers, and other workers can file a mechanic’s lien if they provided services or materials but weren’t paid. This can delay or prevent a home sale.
Judgment Liens
When a court rules that a homeowner owes money from a lawsuit, the creditor can place a judgment lien on their property. This lien ensures the debt is paid when the home is sold.
Mortgage Liens
When a homeowner takes out a mortgage, the lender places a lien on the home as collateral. If the mortgage isn’t repaid, the lender has the right to foreclose on the property.
HOA Liens
Homeowners associations (HOAs) can file liens if a homeowner falls behind on HOA fees, fines, or special assessments. Unresolved HOA liens can lead to foreclosure.
Who Can Put a Lien on Your House in California?
Liens can be placed on a home by multiple entities depending on the nature of the debt. Homeowners facing a lien on a house in California must resolve it before selling or refinancing.
Government Agencies
Unpaid state, federal, or property taxes can lead to a lien being placed by the IRS, Franchise Tax Board, or county tax collector.
Private Creditors
If a homeowner loses a lawsuit and owes money, the winning party can file a judgment lien to ensure they get paid.
Home Improvement Professionals
Contractors, suppliers, and laborers who have not been paid for work on a home can file a mechanic’s lien, which remains on the title until resolved.
Lenders and Banks
Mortgage lenders automatically place liens on homes to secure loan repayment. If the mortgage is unpaid, the lender can foreclose.
HOAs and Condo Associations
Unpaid HOA dues or fines can lead to an HOA lien. In some cases, HOAs may initiate foreclosure proceedings over unpaid assessments.
Liens on a House During a Divorce
Divorce can complicate homeownership, and a lien on a house in California often becomes part of the financial settlement. Because homes are valuable assets, liens may be placed to secure debts, divide equity, or protect a spouse’s interest. Before a home can be sold or refinanced, these liens must be addressed.
Divorce Liens for Equity Protection
In California, spouses are entitled to an equal share of community property. If one spouse is awarded the home, the other may secure their share of the home’s equity by placing a divorce lien. This ensures they are paid their fair portion if the home is sold later.
Marital Liens and Settlement Agreements
When one spouse receives the home but cannot refinance immediately, a marital lien may be placed to guarantee the vacating spouse receives their share at a future date. This prevents the new owner from selling without resolving the lien.
Community Property Liens
If property ownership is disputed, a community lien may be filed to determine whether both spouses have a claim to the home. Until the issue is resolved, the lien prevents the property from being sold or transferred.
Third-Party Liens in Divorce
A spouse’s outstanding debts can also result in liens placed by third parties. In a community property state like California, creditors can place liens on jointly owned property to satisfy debts. These liens must be cleared before selling or refinancing.
How to Remove a Lien on a House After Divorce
Clearing a lien on a house in California after divorce requires legal and financial steps. Whether dealing with a divorce lien, tax lien, or judgment lien, resolving it is essential before moving forward with a home sale.
Paying Off the Lien
The simplest solution is to pay the outstanding amount in full, which allows for a lien release. Government agencies like the IRS automatically send a lien release once the debt is paid. If it doesn’t arrive within 30-60 days, follow up with them.
Negotiating a Settlement
Some creditors may agree to a reduced settlement if the full amount cannot be paid. This is common with judgment liens and divorce-related liens where partial payments may satisfy the debt.
Using a Promissory Note
If a spouse owes equity in a divorce but cannot pay immediately, a promissory note can outline a structured payment plan. The lien remains until the full amount is paid.
Selling the Lien to a Third Party
In some cases, a lienholder may agree to sell the lien to a third-party investor. The investor then collects the debt, allowing the original lienholder to receive immediate cash.
Refinancing to Cover the Lien
If a spouse keeps the home after a divorce but needs to pay off a lien, refinancing can provide the necessary funds. The new mortgage must cover the home’s value plus the lien amount for this option to work.
Legal Disputes and Lien Challenges
If a lien is incorrect or unfair, a homeowner can challenge it through legal action. If successful, a judge may order the lien removed from the property.
How Liens Affect Home Sales
Liens make selling a home more difficult, often requiring financial and legal intervention before a sale can go through. The longer a lien remains unpaid, the more complications it can create.
Delays in Closing
Selling a home with a lien requires resolving the debt first, which can add weeks or months to the process. If a lien dispute arises, legal proceedings may be necessary.
Reduced Buyer Interest
Many buyers hesitate to purchase homes with outstanding liens, fearing legal or financial complications. As a result, sellers may need to lower their asking price to attract buyers.
Negotiation Challenges
Some creditors are open to settling for less than what is owed, but these negotiations take time and legal expertise. Not all creditors are willing to accept reduced payments.
Title Issues
Since liens on houses attach to a home’s title, they must be resolved before buyers can obtain financing. Lenders typically won’t approve a mortgage for a home with an active lien, limiting the number of interested buyers.
Selling a Home with a Lien to Osborne Homes
A lien on a house in California doesn’t have to prevent you from selling. Osborne Homes provides an easy solution for homeowners dealing with liens, offering a fast, hassle-free cash sale.
No Need for Lien Clearance Before Selling
Unlike traditional buyers who require a lien-free title, Osborne Homes can work with sellers to navigate lien-related challenges, even if debts haven’t been fully paid.
Quick Sale Process
Traditional home sales can take months when liens are involved, especially if creditors need to negotiate. Osborne Homes eliminates the wait by purchasing homes quickly with cash.
No Repairs or Cleaning Needed
Homes with liens often need additional repairs or maintenance, but Osborne Homes buys properties as-is. Sellers don’t have to worry about fixing anything before selling.
No Hidden Fees or Commissions
Selling through an agent comes with commissions and closing costs. Osborne Homes eliminates these fees, allowing homeowners to keep more money from the sale.
Need to Sell Fast? We Can Help
Dealing with liens on houses can be overwhelming, but you don’t have to handle it alone. What is a lien on a house? It’s a legal claim that can delay or prevent your ability to sell, but Osborne Homes can help. We specialize in buying homes with liens, offering a simple, cash-based solution so homeowners can move on quickly. No waiting, no costly repairs—just a fast and fair sale. Call us today and see how we can help you turn your lien-affected property into cash.
