Options for Selling a Home with Unpaid Property Taxes or Liens

Selling a home with unpaid property taxes or liens can feel overwhelming, but it’s a situation many homeowners face. Whether you’re dealing with financial hardship, inherited property with tax debt, or simply need to move on, understanding your options is the first step toward a solution. This guide will walk you through every strategy for selling a home with tax liens or other debt attached.

Understanding Property Taxes and Liens

Before exploring your options, it’s important to know what you’re dealing with. Property tax liens are placed on your home when taxes go unpaid and must typically be satisfied before the property can be sold. Other common liens include mechanic’s liens, judgment liens, HOA liens, and IRS tax liens. The key challenge is that liens attach to the property itself, meaning they follow the home through any sale.

Why Homeowners Sell Properties with Liens

Common reasons for selling with unpaid taxes or liens include:

Financial hardship – job loss, medical bills, or unexpected expenses.
Inherited property – discovering tax debt on a home left by a relative.
Divorce or separation – needing to liquidate assets quickly.
Relocation – moving for work and unable to manage obligations.
Overwhelming debt – property taxes are just one of many financial burdens.

If any of these sound familiar, you have options beyond foreclosure.

Step 1: Determine What You Owe

Contact your county tax assessor to get the exact amount of unpaid property taxes, including penalties and interest. Request a title search to identify all liens against the property. Then calculate your home’s current market value to determine if you have enough equity to cover the liens or if you’re facing a short sale situation.

Step 2: Explore Your Selling Options

Option 1: Pay Off Liens Before Selling

If you have access to funds, paying liens before listing makes the sale process straightforward.

Pros: Clean title, wider buyer pool, higher sale price.
Cons: Requires upfront cash.

Option 2: Sell and Pay Liens from Proceeds

The most common approach is using sale proceeds to pay all liens at closing. The title company handles this automatically.

Pros: No money needed upfront, standard process.
Cons: Reduces your net proceeds, requires sufficient equity.

Option 3: Negotiate a Short Sale

If you owe more than the home is worth, lien holders may agree to accept less than the full amount.

Pros: Avoids foreclosure, less credit damage.
Cons: Requires approval, lengthy process (3-6 months), potential tax consequences.

Option 4: Sell to a Cash Buyer

Companies that buy houses for cash specialize in properties with liens and handle the resolution process themselves.

Pros: Fast closing (7-14 days), no repairs needed, buyer handles liens, no commissions.
Cons: Lower sale price than open market.

This option is ideal when you need speed and certainty. Companies like I Buy Michigan purchase homes regardless of condition or lien status.

Option 5: List with a Real Estate Agent

If your property is in good condition with enough equity, listing with an experienced agent remains viable.

Pros: Potentially highest sale price, professional guidance.
Cons: Takes 60-90 days, requires preparation, agent commission (5-6%).

Option 6: Installment Agreement

Some counties allow payment plans for unpaid taxes while you list the property.

Pros: Prevents immediate foreclosure, gives time to sell.
Cons: Liens remain until paid in full, requires ongoing payments.

Step 3: Understand Legal and Tax Implications

Property tax liens take first priority and must be paid before other creditors. If debt is forgiven through a short sale, you may face tax consequences on the cancelled amount. Some states allow deficiency judgments where lien holders can pursue remaining balances. Always consult with an attorney and tax professional to understand your specific situation.

Step 4: Prepare Documentation

Gather all relevant documents including property tax statements, lien notices, mortgage statements, and correspondence with lien holders. For traditional sales, make cost-effective improvements. If selling to a cash buyer, you can skip repairs entirely.

Why Work With I Buy Michigan?

Selling a home with unpaid property taxes or liens doesn’t have to be complicated. I Buy Michigan specializes in challenging situations:

We buy houses across Michigan for cash, regardless of liens or complications.
No repairs, no cleaning, no commissions – we handle lien resolution.
Close on your timeline – 7 days or 60 days, your choice.
Fair cash offers with no hidden fees.

To learn more, check out our related guides:

How to Avoid Property Tax Foreclosure in Michigan
Selling an Inherited Property with Tax Liens
Understanding Michigan Property Tax Laws
Fast Cash Sales for Distressed Properties

Conclusion

Selling a home with unpaid property taxes or liens is possible with the right approach. Whether you pay liens upfront, use sale proceeds at closing, negotiate a short sale, or work with a cash buyer like I Buy Michigan, the key is taking action before the situation worsens. Don’t let property tax debt lead to foreclosure. Contact I Buy Michigan today for a no-obligation consultation and discover how we can help you move forward!