Selling a house with liens or judgments on it in Arizona

How liens are found

When escrow opens, the title company searches the county recorder's records and court judgment indexes for the property and the owners' names, and issues a title commitment. Schedule B of the commitment lists the liens and other items that have to be cleared before closing. Read it as soon as you get it; it's the to-do list for your sale.

Common Arizona liens and how they clear

• Judgment liens: a recorded judgment is a lien on the debtor's real property in that county for ten years (ARS 33-964). It's paid from proceeds, or negotiated.
• The homestead exemption: up to $400,000 of equity in the home you live in is protected from most judgment creditors (ARS 33-1101). When a homestead sells, that amount is paid to you before those judgment creditors (ARS 33-964), and title may be able to release small judgments without a payoff.
• Federal tax liens: paid from proceeds, or the IRS can issue a certificate of discharge for the property (IRS Publication 783). Apply early; it takes weeks.
• HOA liens: paid from escrow. Arizona caps an HOA's resale and lien-statement fees at $400, plus up to $100 for rush service (ARS 33-1806).
• Mechanics' liens: paid, negotiated, or released by recording a surety bond for 150% of the claim (ARS 33-1004).
• Property tax liens: redeemed through the county treasurer at closing (ARS 42-18153).
• Solar UCC fixture filings: paid off, or the contract is transferred with the solar company's approval.

Negotiating a payoff

Creditors holding old judgments or collection accounts will often take less than the full amount to be paid now. Ask in writing, get the agreed amount in a written payoff letter addressed to the title company, and make sure it says the lien will be released on payment. If the lien is your mortgage and the lender has to take less, that is a short sale and needs formal approval.

Liens that aren't yours

Judgments against someone with a similar name show up often. Title can usually clear them with a statement of identity: a form with your full name, birth date, and past addresses that shows you're not the debtor. Paid liens that were never released can be cleared with proof of payment and a release from the creditor.

A worked example

An illustration only:

• Sale price: $320,000
• Mortgage payoff: $190,000
• Judgment from 2019: $14,000, settled for $9,000
• HOA balance: $2,400
• Back property taxes: $3,100
• Net to the seller before other costs: about $115,500

Dealing with this now? Sell a house with liens · Behind on the mortgage in Phoenix

General information for Arizona homeowners, not legal, tax, or financial advice. Huge Cash Offer is a home buyer, not a law firm, lender, or housing counselor.