“Can you sell a house with a lien in Texas?”
It’s a question that stops many homeowners in their tracks when they discover a legal claim against their property. The simple answer is yes – but there’s more to the story. While selling a house with a lien takes extra work, thousands of Texas homeowners successfully navigate this challenge every year.
Key Takeaways
- Before diving deep into liens, here’s what Texas homeowners need to know:
- Texas property tax liens take priority over almost all other liens
- The Texas Property Code gives contractors 120 days to file mechanic’s liens
- HOA liens in Texas can lead to foreclosure, even if your mortgage is current
- Texas judgment liens last 10 years but can be renewed
- Property tax liens in Texas accrue interest at 18% annually
- The Texas homestead exemption protects your home from most judgment liens
- Most lien issues can be resolved at closing using sale proceeds
What is a Lien?
A lien is a legal claim against your property. Much like a sticky note on your front door, it tells the world that someone has a financial interest in your home. In Texas, these claims give creditors certain rights until their debt is settled.
7 Common Property Liens in Texas
Texas property owners might encounter several types of liens, each with unique implications for selling their homes. Let’s break down these liens and what they mean for your property.
1. Tax Liens
In Texas, tax liens pack a serious punch. The state gives tax authorities remarkable power to collect what they’re owed. When you fall behind on property taxes, local tax assessors automatically place a lien on your home. These liens are particularly challenging because they take priority over almost everything else – even your mortgage.
What makes Texas tax liens especially tricky is their growth rate. With an 18% annual interest rate plus additional penalties that can reach 20%, a small tax bill can balloon into a major headache faster than you can say “tax sale.” The good news? Texas tax offices often work with homeowners to set up payment plans, especially if you’re trying to sell.
2. Mortgage Liens
Most Texas homeowners are familiar with mortgage liens, even if they don’t realize it. When you borrowed money to buy your home, you agreed to a mortgage lien. It’s the bank’s way of protecting their investment. These liens typically cause the least stress during a sale because they’re handled routinely through the closing process.
But Texas has a twist – home equity loans face strict regulations under state law. Our state constitution limits total mortgage liens to 80% of your home’s value. This protection can actually help some homeowners avoid falling too deep into debt.
3. Mechanic’s Liens
Texas law gives contractors strong rights to protect their payment. A contractor who built your new deck or remodeled your kitchen can file a mechanic’s lien if they haven’t been paid. Here’s where it gets interesting – even subcontractors you’ve never met can file liens if your general contractor didn’t pay them.
Texas law requires specific notices and deadlines for these liens to be valid. Contractors must file within 120 days of completing work, but they also need to send preliminary notices much earlier. Many mechanic’s liens in Texas can be challenged if the contractor didn’t follow these rules exactly.
4. HOA Liens
If you live in a planned community or subdivision, your homeowners association has more power than you might realize. Texas law allows HOAs to file liens for unpaid dues or assessments, and these aren’t just paper threats. Texas courts regularly uphold HOA foreclosure rights, even for relatively small amounts.
The Texas Property Code requires HOAs to follow specific steps before filing liens, including sending proper notices. However, once they’ve met these requirements, HOA liens can create serious problems for sellers.
5. Judgment Liens
When someone wins a lawsuit against you in Texas, they can file a judgment lien against your property. These liens last 10 years but can be renewed. Here’s an important Texas twist – our state’s homestead laws protect your primary residence from most judgment liens. But if you’re selling, judgment liens against other properties you own could affect your ability to buy your next home.
6. Child Support Liens
Texas takes child support seriously. The Attorney General’s office can file liens for unpaid child support, and these claims come with strong collection powers. Unlike some other liens, child support liens can attach to your homestead property and are rarely negotiable without paying in full.
7. Federal Tax Liens
When the IRS files a tax lien, it covers all your property, not just your home. These liens are particularly challenging because you’ll need to deal with federal authorities rather than local offices. However, the IRS has programs to help taxpayers resolve liens, including subordination agreements that can allow you to sell your home.
The key to handling any type of lien in Texas is understanding which ones take priority and knowing your options for resolution. While tax authorities usually have first claim, other liens follow specific rules about their priority. Working with professionals who understand these rules can make the difference between a successful sale and a stalled transaction.
Remember, having a lien doesn’t mean you can’t sell – it just means you need a plan to address it. Whether you’re dealing with back taxes, an upset contractor, or an HOA dispute, solutions exist. Many Texas homeowners successfully navigate lien issues every year, either by paying them off, negotiating settlements, or working with buyers who understand how to handle lien situations.
Property Tax Lien Solutions
Texas offers several programs to help homeowners handle property tax liens. The Texas Veterans Land Board provides special assistance to veteran homeowners facing tax liens. For seniors and disabled homeowners, Texas law allows tax deferral, though interest still accrues.
In major cities like Houston, Dallas, and San Antonio, tax assessor offices run tax lien assistance programs. These programs sometimes offer interest reduction or payment plans. The key is reaching out before the lien goes to a tax sale.
Navigating Title Companies in Texas
Title companies play a crucial role in handling liens during Texas property sales. Unlike some states where attorneys handle most closings, Texas primarily uses title companies. These companies not only find liens but often help solve lien problems.
Consider Fort Worth resident David Chen’s experience. His title search revealed a decade-old contractor’s lien he never knew existed. The contractor had gone out of business years ago, but the lien remained. His title company tracked down the former business owner in Oklahoma and secured a lien release, saving his sale.
The Texas Department of Insurance regulates title companies and maintains a list of approved companies. Working with a licensed title company provides important protections. If they miss a lien in their search, their insurance typically covers any losses.
Creative Solutions for Texas Sellers
Sometimes traditional paths don’t work for Texas homeowners with liens. Maria Hernandez in El Paso found herself with both an IRS tax lien and a judgment lien from a creditor. Rather than losing her sale, she negotiated with her buyer to handle the liens through closing. The buyer’s lender agreed to a higher loan amount, with the extra funds paying off the liens at closing.
Other Texas sellers work with investors who specialize in lien situations. These buyers often have experience negotiating with lien holders and may even advance funds to clear liens before closing. While they typically offer less than market value, they provide an option for sellers in tough situations.
The Role of Texas Real Estate Attorneys
While title companies handle most lien issues, some situations call for legal help. Texas real estate attorneys often help when:
- Multiple liens create complex priority issues
- Lien amounts seem incorrect
- Lien holders prove difficult to contact
- Foreclosure threatens
- Bankruptcy might offer solutions
For example, a San Antonio attorney recently helped a client prove that a $45,000 contractor’s lien was invalid because the contractor hadn’t followed Texas notice requirements. The attorney’s fee saved the seller thousands in the end.
Time Frames and Deadlines
Texas law sets specific deadlines for various lien actions. Understanding these deadlines helps homeowners plan their sale timeline:
Property tax liens in Texas become delinquent on February 1st each year. The tax assessor can start foreclosure proceedings after July 1st. However, most offices wait until the following year before taking serious action.
For mechanic’s liens, contractors must file within 120 days of their last work. However, they must send preliminary notices much earlier – by the 15th day of the second month for general contractors, and the 15th day of the third month for subcontractors.
Judgment liens last 10 years but creditors can renew them. Many sellers don’t realize that even old judgment liens might still be valid. Always check if a creditor filed for renewal.
Moving Forward
Texas homeowners facing liens have more options than they might think. Whether it’s working with tax authorities, negotiating with lien holders, or finding creative solutions through title companies, paths exist to clear liens and complete sales.
Remember that property rights in Texas come with both protections and responsibilities. While our homestead laws offer strong protection against some types of liens, taxes and certain other claims can still attach to your property. Staying informed and addressing issues early usually leads to better outcomes.
The most important step is taking action. Ignoring liens rarely works in Texas, where interest and penalties can grow quickly. Whether you’re planning to sell now or just want to clear your title for the future, understanding your situation and exploring your options makes the process more manageable.
Don’t Let Liens Hold You Back: Your Next Steps
Finding out you have a lien doesn’t mean you’re stuck. Texas homeowners face lien situations every day, and solutions exist for every scenario. The key is taking that first step toward resolution.
Start by requesting a title search to understand exactly what you’re dealing with. Many title issues turn out to be simpler than they first appear. That old judgment lien might have expired, or that contractor’s claim might not have been filed correctly.
If you’re looking to sell quickly without dealing with the back-and-forth of lien negotiations, companies like House Buyers Cash regularly help Texas homeowners in your situation. They buy properties with liens at fair market value and handle the lien resolution process themselves. This means you can close on your timeline without fronting money to clear the liens first.
For homeowners who prefer the traditional sale route, work with professionals who understand Texas lien law. Your local tax assessor’s office can help with property tax issues. A title company can guide you through most other lien situations. And when things get complex, a real estate attorney can protect your interests.
Remember, liens are just another hurdle in the home-selling process – not a dead end. With the right help and approach, you can move forward with your plans and get back to what matters most to you.
Need immediate help with a lien situation? We have helped countless Texas homeowners sell their properties despite having liens, tax issues, or other title complications. We handle all the paperwork, negotiations, and lien resolutions, turning what seems like an impossible situation into a straightforward sale. Get a no-obligation cash offer in 24 hours by contacting us today.
