Expert answers from Michigan's trusted cash home buyers. Questions? Call (269) 389-9961 anytime.
Yes — in most cases, liens are paid off at closing from the sale proceeds. The title company holds proceeds in escrow, pays off each lien in priority order, and distributes the remainder to you. You don't need to pay off liens before listing — they're resolved at closing.
Common Michigan property liens: mortgage (voluntary, primary lien), home equity loan/HELOC, property tax liens (Wayne County and others have extensive delinquent tax situations), mechanic's/contractor's liens (unpaid work), judgment liens (from court judgments), HOA liens, IRS/state tax liens, and child support liens.
If total liens exceed the sale price, you're 'upside down.' Options: negotiate with lienholders for a payoff settlement (lienholders often accept less than face value to receive something), proceed with a short sale (lender approval required for first mortgage), or consider bankruptcy counseling. A real estate attorney can advise on priority and negotiation.
A Michigan mechanic's lien must be filed within 90 days of last providing services (for contractors/subcontractors). The lien is valid for 1 year. Unpaid contractors can foreclose on the lien if unpaid. All mechanic's liens appear in the title search and must be resolved before closing. If a contractor filed a lien in error (work was paid), you'll need a lien waiver or court order to clear it.
Simple liens (mortgage, single tax lien): resolved at closing, same day. Mechanic's liens in dispute: may require negotiation or litigation (weeks to months). IRS tax liens: require IRS payoff statement (5-10 business days minimum). Title companies are experienced with all of these — disclose any liens you know about upfront so there are no surprises.
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