When contractors, subcontractors and other building professionals don’t get the payment they’re owed by property owners, they can place a lien on that property. Such a lien is often referred to as a construction, contractor’s or mechanic’s lien.
When there’s a valid lien on your property, you can’t sell it until that lien is removed. Of course, paying off the debt is typically the easiest way to take care of this. You then need a release-of-lien form from your creditor to free up your property.
What are your options?
However, what if you need or want to sell your property but you can’t afford to pay off the debt? Maybe you will be able to pay it off once you sell the property, but you can’t sell it with the lien on it. That’s a frustrating Catch-22.
There are some ways that a lien can be released without full payment of a debt. For example, if the statute of limitations has run out on the lien, you can get it released. You’ll still owe the debt, however.
If you have been making payments to your creditor, you may be able to negotiate with them to release the lien in exchange for making higher payments and/or paying off the debt more quickly. If selling the property can help you do that, your creditor may be agreeable to it. Remember, however, that if this was a valid lien based on money you legitimately owe, you still owe that money even if you get the lien released.
It’s probably wise to get an experienced real estate attorney involved who can assist with working out a contract for payment with your creditor and ensure that your lien is released as promised. If you believe that a lien wasn’t valid or that you have paid the money that you owed, an attorney can also help you work to get the lien released.