How To Sell Your House With Liens or Back Taxes in Minnesota

Are you burdened with liens or tax problems on your house in the Twin Cities? You don't have to feel stuck.

A lot of homeowners think that if there's a lien on the house, or they're behind on property taxes, they can't sell. That's not true! In this post we'll go over what liens are, how property taxes work here in Minnesota, and what you can do about it.

What is a lien?

A lien is basically a legal claim on your property for a debt you owe. As long as the lien is there, the person you owe has a claim on the house. It has to be paid off (or otherwise taken care of) before the buyer can get a clean title.

There are a few different kinds you might run into:

• Mortgage. Yep, your mortgage is a lien. You agreed to it when you bought the house.
• Property tax liens. Unpaid property taxes are a lien on the house, and they usually come first in line, ahead of pretty much everything else.
• Mechanic's liens. If a contractor or supplier worked on the house and didn't get paid, they can file a lien. In Minnesota they generally have 120 days after finishing the work to do it.
• Judgment liens. If someone sues you and wins, that judgment can attach to real estate you own in that county.
• IRS or state tax liens. For unpaid income taxes.

How property taxes work in Minnesota

Minnesota is a little different from a lot of other states, so a lot of what you read online doesn't apply here.

In some states the county sells your tax debt to investors at a "tax sale." Minnesota doesn't do that. Here, if property taxes go unpaid, they become delinquent and penalties and interest start piling up. If they stay unpaid long enough, the property can eventually be forfeited to the state, which means you lose the house.

The good news is that it usually takes a while. For most houses there's a redemption period of about three years before the house is actually forfeited. The bad news is those penalties and interest keep adding up the whole time, and a lot of people don't realize how close they are until they get the final notices.

And watch out if the house is sitting empty. Vacant or abandoned houses can be put on a much shorter clock, as short as a few weeks. If you've got an inherited house nobody's living in and the taxes are behind, don't wait on this one.

One thing that catches people off guard... when a mortgage gets paid off, the bank stops paying the property taxes out of escrow. We've seen a lot of folks (especially older homeowners and people who inherited a house) fall behind simply because nobody told them the tax bill was theirs now.

A couple more things worth knowing:

• Ask the county about a payment plan. Minnesota counties offer a payment plan for delinquent taxes called a "confession of judgment." It can stop things from getting worse while you catch up.
• Even after forfeiture, there may be money owed to you. After a 2023 Supreme Court case that actually started right here in Hennepin County, Minnesota changed its law so former owners can claim the extra value if a forfeited property sells for more than the taxes owed. Call the county if this applies to you.

Can I sell my house with liens or back taxes?

Yes! This is the part most people don't know. Liens and back taxes usually get paid off at closing, right out of the sale proceeds.

The title company runs a title search, finds everything that's owed, gets payoff amounts, and pays each one off when the house sells. You walk away with what's left. You don't have to come up with the cash to pay off the liens first.

The only real problem is when you owe more than the house is worth. Then you'll need to work something out with the people you owe before you can sell.

Your options

Create a repayment plan

Paying everything off all at once can feel overwhelming, but many creditors (and the county) will work with you on a payment plan. Ultimately their goal is just to get paid. The catch is that it can take a long time, and you're stuck with the house until it's done.

Dispute the lien

If a lien was filed on your house that you don't think is right, you can dispute it. You'll need documentation and a good case. If it's a contractor lien over bad work, keep detailed records of what you were promised, what you got, and what you paid to fix it. Photos, dates, inspection reports... all of it. An attorney can help a lot here.

Sell the house

If you're done with the house anyway, selling it is often the cleanest way out. The liens and taxes get paid from the sale and you get to move on.

The problem is that listing a house with tax problems or liens isn't always easy. A buyer with a bank loan might get nervous, especially if the house also needs repairs, and the whole thing can drag on for months while the penalties keep adding up.

Selling directly to Trademark Properties

When you sell to us, we close at a reputable local title company. They take care of finding out what's owed and paying it off at closing. You don't have to fix anything, you don't pay any commissions, and you pick the closing date.

Don't wait on this. With back taxes especially, the longer it goes, the fewer options you have.

We're not attorneys or tax advisors and this isn't legal advice. If you're facing tax forfeiture or a lien dispute, please talk with a Minnesota attorney or call your county.

Have questions about selling your house with liens or tax problems? Give us a call at Call us or fill out the form. There's never any obligation!