If you just got a certified letter about a lien on your house, take a breath. Liens are extremely common in residential real estate, and they get cleared at closing more often than they stop deals. The real question isn’t “can I sell?” – it’s “what does the lien do to my net proceeds, and what do I need to handle ahead of time?”
Here’s a clear look at the most common liens we see on Spokane properties, how they get resolved at closing, and what to do if there’s not enough equity to cover them.
What a Lien Actually Is
A lien is a legal claim against a property securing a debt. It “clouds title,” meaning the property can’t be sold with clean title until the lien is paid, released, or otherwise resolved. Title companies pull a title search early in escrow and find every recorded lien, including some you may not know about.
The general rule: liens get paid at closing, in priority order, from the sale proceeds. Whatever’s left after liens, your mortgage payoff, and closing costs goes to you.
The Common Liens We See in Spokane
1. Mortgage / Deed of Trust
The biggest “lien” on most homes. Paid off at closing from proceeds.
2. Property Tax Liens
Spokane County collects property taxes. Unpaid taxes become a senior lien on the property. They get paid at closing. After three years of delinquency, the County can move to foreclose.
3. IRS Federal Tax Liens
If you owe federal back taxes, the IRS can file a Notice of Federal Tax Lien. Important facts:
- Federal tax liens survive for 10 years from assessment and can be refiled
- They attach to all your property, including the house
- At closing, the title company can request a payoff and the IRS will release the lien against the property once paid
- If there’s not enough equity to fully pay, the IRS will sometimes accept a “discharge of property from federal tax lien” so the sale can close – this requires a written application and takes time
4. State Tax Liens (Washington Department of Revenue, Employment Security)
Similar process. Title pulls a payoff, the state releases the lien at closing.
5. Mechanic’s and Materialmen’s Liens
Contractors and suppliers who weren’t paid for work on your property can file a lien. In Washington, the contractor must record the lien within 90 days of last providing labor or materials (RCW 60.04) and must file suit to foreclose within 8 months. These often get negotiated down at closing.
6. Judgment Liens
If a creditor sues you and wins, the judgment can become a lien against your real estate when properly recorded. Judgments in Washington are generally good for 10 years and can be renewed.
7. HOA / Condo Association Liens
Unpaid HOA dues, fines, and assessments can become a lien. Often these include attorney fees that make the payoff larger than the original debt.
8. Child Support and Spousal Support Liens
The Division of Child Support can record liens for past-due support. These are paid at closing.
9. City / Code Enforcement Liens
Cities like Spokane can record liens for unpaid code enforcement fines or abatement costs. These attach to the property and get paid at closing.
10. Medicaid Estate Recovery Liens
On inherited properties, the State sometimes asserts a claim for Medicaid benefits paid to the decedent. These are handled through probate and the title company.
How Liens Get Cleared at Closing
The mechanics are simpler than they sound:
- You sign a purchase agreement
- Title company opens escrow and pulls a preliminary title report
- Every lien is listed, with current payoff amounts requested directly from each lienholder
- At closing, the title company uses the buyer’s funds to pay every lien in priority order
- Lienholders send releases, which get recorded with the county
- Title transfers to the buyer free and clear
- You receive whatever proceeds remain
The seller doesn’t personally have to negotiate with the IRS or the contractor. The title company does the legwork. You just sign.
What If There Isn’t Enough Equity?
This is where it gets harder, but not impossible. If your liens plus mortgage exceed the sale price, options include:
- Negotiated lien releases. Many lienholders will accept less than full payoff to release the property, especially when the alternative is the property going to foreclosure and them getting wiped out anyway.
- Short sale. Your mortgage lender agrees to accept less than the loan balance.
- Cash to close. You bring money to closing to cover the shortfall (rare and usually not realistic).
- Sell to a cash buyer who specializes in lien negotiation. Some investors are willing to coordinate with multiple lienholders to make the deal work.
We buy Spokane houses with liens all the time, including IRS liens, judgment liens, and code enforcement liens. We work with the title company and often directly with lienholders to clear the title.
Liens That Surprise Sellers
A few we see that catch people off guard:
- Old judgments you forgot about – a 6-year-old medical debt that got reduced to judgment
- Ex-spouse liens from divorce decrees that weren’t properly recorded or released
- Mechanic’s liens from contractors you thought you’d resolved
- Decedent’s liens on inherited property – debts the previous owner had
- Utility liens for unpaid water/sewer from the City
None of these have to kill a deal. They just need to be identified and addressed during escrow.
What You Should Do Now
- Make a list of everything you know about. Tax debts, judgments, contractor disputes, HOA back-dues. Write it all down.
- Don’t hide anything. Title is going to find it. Better to know upfront and price accordingly.
- Talk to a buyer who’s seen this before. Liens are routine. Don’t let a green agent or unfamiliar buyer scare you.
- Move sooner rather than later. Liens grow with interest, penalties, and attorney fees. Equity erodes month by month.
Want a Cash Offer on a Lien-Encumbered House?
If your Spokane house has liens against it and you want a straightforward path to closing, call (509) 720-8429 or send the address through the form. We’ll talk through what you owe, what the title looks like, and put together a written cash offer within 24-48 hours. We work directly with local title companies and lienholders to get deals closed. No pressure, no fees, and no judgment about how the liens got there.