What is a Judgment Lien?
A judgment lien is considered non-consensual, which means that it can be placed on your house without your express permission. Judgment liens happen when someone sues you and receives monetary damages. If you do not have enough cash to cover these damages, then a lien is placed on your property in order to cover them. What this lien does is that it basically entitles the sheriff’s department to seize the property and sell it in order to pay off the monetary damages that the person who went to court against you was awarded. Getting a judgment lien on your house can be a difficult and devastating process, but you do have options about how to navigate it before things really get out of hand.
Your Options with a Judgment Lien
Your options for getting out of a judgment lien depend on a few things, including how much time you have and how much equity you have in the home. Let’s say that you have not paid off your mortgage completely. In that scenario, a judgment lien could lead to a foreclosure. However, a foreclosure doesn’t mean you’re off scot-free: all it does is remove the lien from the property itself. However, if the lien is not paid off, you will still be responsible for paying it; other assets in your possession may be seized in order to pay off the lien.
Typically, you have about 45 days from the judgment lien’s determination to either paying off the lien or undergoing foreclosure. During this time, you have options about how to move forward. In this scenario, it’s worth considering selling your property.
Cash vs. Conventional
If you decide to sell your property in order to be free of the judgment lien, the next step will be deciding how you want to sell the property. Lots of homeowners might be inclined to go the conventional real estate route, working with an agent in order to list their house and field offers from multiple buyers. Here’s the thing, however: if there is a lien on your property, that will be disclosed to the buyer before they close on your house. If someone is purchasing a home that they intend to live in, they are likely to be very hesitant about moving forward with there being a lien on the property. Most conventional real estate buyers aren’t investors; they are searching for a home that they can take out a mortgage on and move into with as much simplicity as possible. You’d be hard-pressed to find a conventional buyer who would be willing to take on a property with a lien on it. On top of that, the average traditional real estate sale takes about three months, which is longer than you’d have to before your property is seized.
Your other option is to sell your house for cash, which makes the process easier for a few reasons. First off, cash buyers are usually investors. This means that they’re not planning to build a life in the house, and they don’t need to go through the extensive mortgage approval process in order to buy the house in the first place. Cash buyers are used to buying houses in all sorts of conditions, including properties with judgment liens on them. This means that they know how to proceed so that everyone gets the best case scenario out of the process. That usually means that the cash buyer will take over the lien and will pay it off for you. As a result, the amount that they purchase the home for will accommodate for the expense of paying off the lien. If you own the house outright or have a lot of equity in it, this will likely mean that you will still walk away with a good chunk of change when all is said and done.
Finding a Good Cash Buyer
Judgment liens can be tricky to navigate, but it’s totally possible to get out of one if you work with a reliable buyer who knows the market and communicates clearly with you. Be sure to ask your buyer to take you step by step through their cash sale process, explaining to you how they will take over and pay off your lien, and what that will mean for your final cash offer. If you find a buyer who is willing to clearly go over all of this information with you, who can make sure their process fits your timeline, and who responds promptly to all of your calls and questions, it’s a great sign that you’ve found the right cash buyer to help see you through this tough spot.