What Happens To Liens When People Purchase Foreclosed Homes?
Buying a foreclosed home is a great way to pay less for a house than what it is worth, but there are some risks you should be aware of before you sign the contract. One risk is that the foreclosed home might have liens on it. If you are trying to buy a foreclosed home that has liens, here are several things you should know about this.
How liens are discovered
To buy any house, you will need to hire a company to perform a title search on the home, and this is how liens are discovered. When there is a lien on a house, it means that the owner of the house owed money to someone, and this money must typically be paid when the house sells. Liens can be from the IRS for tax debts, the state for property taxes, or contractors for bills related to house repairs that were not paid. Mortgages on a house are also considered liens. If the title work reveals a lien on the house, you may have some extra steps to take before you can buy this house.
Possible outcomes of liens on a foreclosed home
Several different things can happen when liens are discovered on foreclosed homes, and one possible outcome is that you will have to pay the lien. If you do not pay it, you will not be able to close on the house. When liens are present, they are typically paid for through the closing on the houses. In other words, there may be nothing you can do if you want to buy the house other than pay for the liens on it.
There is also a chance you might be able to get the liens dropped, but this will depend on what they are for. If the liens are from mortgage loans, these will generally get dropped when the house sells. Another option is to see if the timeframe of the liens has expired. If so, you might be able to request that they be dropped. You could also contact the lienholders and ask what options you have, or you could talk to your real estate agent or an attorney to find out what you can do about the liens on a house you want to buy.
Saving money by purchasing a foreclosed home can be a great idea, but it is always good to thoroughly investigate a foreclosed home before buying it. If you have questions about foreclosed homes for sale, contact a real estate agent today.