How to Sell a House With Liens in California

Liens Don't Have to Stop Your Sale

A lien on your property is a legal claim by a creditor. It attaches to your real estate and must be addressed before (or at) closing. Many homeowners discover liens during the title search and panic — but there are clear paths forward.

Common Types of Liens in California

Property Tax Liens The county automatically places a lien on properties with delinquent property taxes. These take priority over almost all other liens, including mortgages.

Resolution: Pay in full, set up a payment plan, or the lien is paid from sale proceeds at closing.

Mortgage Liens Your mortgage is a voluntary lien. When you sell, the mortgage balance is paid from the proceeds at closing.

Resolution: Standard payoff at closing. No issue unless you're underwater (owe more than the home is worth).

Mechanic's Liens Contractors, subcontractors, and suppliers can file a mechanic's lien if they weren't paid for work performed on your property. In California, they have 90 days from completion of work to file.

Resolution: Pay the contractor, negotiate a settlement, or dispute the lien in court. Mechanic's liens expire after 90 days unless the lienholder files a foreclosure action.

IRS Tax Liens If you owe federal taxes, the IRS can place a lien on your real property. These are serious and affect your credit.

Resolution: Pay in full, negotiate an installment agreement, or request the IRS subordinate the lien to allow a sale. The IRS has 120 days to respond to a subordination request.

Judgment Liens If someone sues you and wins, they can record a judgment lien against your property. In California, judgment liens are valid for 10 years and can be renewed.

Resolution: Pay the judgment, negotiate a settlement, or the lien is paid from sale proceeds at closing.

HOA Liens If you've fallen behind on homeowner's association dues, the HOA can place a lien on your property. In California, HOA liens can lead to foreclosure for debts as low as $1,800.

Resolution: Pay the outstanding balance plus fees, or settle at closing.

Can You Sell a House With Liens?

Yes — but the liens must be addressed. There are two main approaches:

Approach 1: Liens Paid at Closing The most common solution. The title company calculates all outstanding liens and pays them from your sale proceeds before disbursing the balance to you.

Example: - Sale price: $600,000 - Mortgage balance: $350,000 - Tax lien: $15,000 - Judgment lien: $25,000 - Remaining proceeds to you: $210,000

This works as long as your equity exceeds the total liens.

Approach 2: Negotiate Lien Reductions If liens exceed your equity, you may be able to negotiate:

• **Partial settlements** with judgment creditors (many accept 50-70% of the balance)
• **Lien subordination** (the lienholder agrees to be paid after the sale)
• **Payment plans** for tax liens (IRS and state)
• **Lien removal** if the lien was improperly filed

What If Liens Exceed Your Equity? If you owe more in liens than the property is worth, you have limited options:

• **Short sale:** Negotiate with lienholders to accept less than what's owed
• **Bankruptcy:** May discharge certain liens (consult an attorney)
• **Negotiation:** Approach each lienholder about settling for less

How Cash Buyers Handle Properties With Liens

Fellow Homes regularly purchases properties with multiple liens. Our process:

1. **We run a preliminary title search** to identify all liens
2. **We calculate our offer** based on market value minus lien payoffs
3. **We work with the title company** to ensure all liens are satisfied at closing
4. **You receive the remaining proceeds** — clean title, no outstanding obligations

We've handled properties with tax liens, mechanic's liens, judgment liens, and multiple mortgages. Liens don't scare us — they're just math.

Ready to Sell Your Home?

Get a free, no-obligation cash offer from Fellow Homes. Call 310-845-6551 or fill out our quick form. We respond within 24 hours.