Selling a house with liens, back taxes or title problems

How liens get paid when you sell a Rhode Island house

A lien is a claim against the house for money someone is owed, and it stays with the house until it's paid or released. In Rhode Island, you generally don't have to pay liens off before you sell. At closing, the title company or attorney's office pays each one out of the sale proceeds, records the releases, and hands you what's left.

Liens that commonly show up on Rhode Island houses include unpaid property taxes and water charges, mortgages and home equity lines (including old ones that were paid off but never released), judgment liens, mechanics' liens, estate tax liens on houses that came through an estate, and federal tax liens.

When you sell to I Buy Rhode Island Houses, the liens are paid out of the sale at closing, and we cover the closing costs.

The municipal lien certificate

A Rhode Island city or town's tax collector issues a municipal lien certificate to anyone who applies in writing. It lists the property taxes, water charges and other assessments that are liens on the house, and it says whether a tax sale is scheduled. The collector has to issue it within five business days, for $25 or less.

Filed in the city or town's land evidence records within 60 days, the certificate generally clears the house of municipal liens it doesn't list. Before you close with I Buy Rhode Island Houses, the closing office gets one along with a title search.

Back taxes, tax liens and tax sales

In Rhode Island, unpaid property taxes are a lien on the house from the date they're assessed, and that lien comes ahead of the mortgage. Before a tax sale, the city or town has to mail notice at least 90 days ahead, and again by certified mail at least 40 days ahead.

A tax sale doesn't end your ownership on the spot. You can redeem by paying what the buyer paid plus a penalty, 10% in the first six months and 1% a month after that, along with later taxes, interest and costs. The buyer can't ask the Superior Court to end that right until a year after the sale, and even then, an owner can ask the court to let them redeem before its final decree.

Back taxes are settled at closing like any other lien. If the house has already gone to a tax sale, I Buy Rhode Island Houses can still buy it for cash while the right to redeem lasts, and the redemption is paid from the proceeds so the title comes back clear.

Judgment liens and mechanics' liens

A judgment lien starts with a court case. Someone wins a money judgment against you and records it against your Rhode Island real estate. Contractors and suppliers who weren't paid for work on the house can claim a mechanics' lien instead: they have 200 days after the work or the delivery to mail the owner a notice of intention and record it in the city or town's land evidence records. At closing, either kind is paid from the proceeds or released if the creditor agrees to take less, and I Buy Rhode Island Houses can buy the house for cash with either one on it.

Estate tax liens on inherited houses

When someone dies owning Rhode Island real estate, an estate tax lien attaches to it automatically and is noted in the land records. That happens even when no estate tax is owed, and the estate files a Rhode Island estate tax return partly to get the lien released. If it's never released, it ends on its own 10 years after the death.

The closing office will want that release on record before an inherited house is sold. I Buy Rhode Island Houses can make a cash offer before the release comes through and close once it's recorded. More on selling an inherited house in Rhode Island.

Title problems: old mortgages, missing heirs and deed errors

A title problem is anything in the records that makes it unclear who owns the house or what's owed on it, and the title search before closing turns them up. For example:

• An old mortgage that was paid off but never released. The closing office gets a discharge from the old lender, or from whoever took over its loans.
• A missing heir who inherited a share years ago and never signed off, so their name is still in the chain of title.
• A mistake in an old deed, like a misspelled name or a description that doesn't match the lot, which the title company will want corrected before closing.

Title problems like an unreleased mortgage, a missing heir or a deed error are usually cleared with payoffs, releases and new paperwork before or at closing, and I Buy Rhode Island Houses can sign a purchase agreement first and close once the title is fixed. When that isn't possible, Rhode Island law lets anyone who claims title through a deed or an inheritance bring a court case to remove the cloud and quiet the title, and how long that takes depends on the case.

Your options side by side

Which way to go depends on how much is owed, what the Rhode Island house is worth and how much time you have.

What we can handle

I Buy Rhode Island Houses helps people out of difficult or uncomfortable ownership situations, and title and legal problems are the deals JB Jackson likes. JB and his wife, Robin Adams, run it as a family business. We're lifelong Rhode Islanders rather than a franchise, we've bought more than 3,000 houses since 1975, and we buy with our own money. We can make a cash offer on a house with:

• Back taxes, or a tax sale that's still within the redemption period
• Judgment, mechanics' or federal tax liens
• An estate tax lien on an inherited house
• A paid-off mortgage that still shows on the record, a missing heir or a mistake in the deed
• Liens on top of a mortgage that's in foreclosure
• Open code violations or repairs it needs