By Eric Berman, REALTOR® | The Eric Berman Team at Compass
TL;DR:
Yes, and most liens are satisfied from proceeds at closing without drama. Two things sellers don't know. Some liens expire — a mechanic's lien in New York has a short filing window and a limited life unless the lienholder extends or forecloses, which changes what a seller is negotiating against. And a disputed lien doesn't necessarily have to be paid to close: bonding it off or escrowing the disputed amount lets the transaction proceed while the dispute continues separately. Both are attorney questions, and both are better raised before listing than during.
Find Out What's Actually There
The first step is the same regardless of what you think you know.
Have your attorney run a title search before listing. It surfaces everything of record — mortgages, home equity lines, judgments, tax liens, mechanic's liens, and municipal charges. Some of it will be a surprise.
Two categories surprise people most.
Liens the seller forgot. A docketed judgment from a decade ago, an old equity line with a zero balance that was never closed, a satisfied mortgage that was never formally discharged. All of them still appear of record.
Liens the seller never knew about. A contractor's lien filed after a dispute, a municipal charge that went unpaid, a lien arising from something unrelated to the property entirely.
The buyer's attorney will find all of it after contracts are signed. Finding it first means weeks to resolve rather than days. That's the same argument as engaging counsel before listing rather than after an offer, and liens are the clearest case for it.
The Types Behave Differently
Not all liens are the same problem, and the differences matter.
Mortgage liens and home equity lines. Routine — satisfied from proceeds at closing. The complications are old ones never discharged, and equity lines that need both closing and discharge. The full treatment of selling with a mortgage covers the mechanics.
Property tax and municipal liens. Unpaid property taxes, and in Port Washington's villages, unpaid village charges or penalties tied to code enforcement. These connect directly to the permit problem — an unresolved violation can carry a financial consequence attached to the property. The full picture of how code and permit issues resolve covers that side.
Judgment liens. A money judgment docketed with the county clerk attaches to real property the debtor owns in that county, and it lasts for years and can be renewed. A seller may genuinely have forgotten one.
Federal and state tax liens. These have their own release and discharge procedures, covered below.
Mechanic's liens. Filed by contractors, subcontractors, or suppliers who weren't paid. These behave differently from everything else and deserve their own section.
Mechanic's Liens Expire
This is the most useful thing on this page and almost no seller knows it.
Under New York's Lien Law, a mechanic's lien against real property must be filed within a defined window after the last work was performed or materials furnished — and that window is shorter for a single-family dwelling than for other property. A lien filed outside the window is vulnerable.
And once filed, a mechanic's lien has a limited life. It remains valid for a period — commonly stated as one year for a private improvement — unless the lienholder either obtains an extension or commences a foreclosure action. If neither happens, the lien can expire.
Two consequences for a seller.
Timing changes the negotiation. A seller facing a contractor's lien is not necessarily facing a permanent obligation. Whether the filing was timely, whether the lien has been extended, and how much life it has left are all questions with answers — and the answers affect what a reasonable settlement looks like.
A disputed lien has options beyond paying it. More on that next.
None of this is a reason to ignore a lien. It's a reason to have an attorney look at the specifics rather than assuming the amount claimed is the amount owed. Filing requirements, durations, extension procedures, and the effect of an amendment all turn on the particular lien and current law.
A Disputed Lien Doesn't Have to Be Paid to Close
The original framing — liens must be resolved, and resolution means payment — leaves out the mechanism sellers most need when they believe a lien is wrong.
Bonding. New York provides procedures for discharging a mechanic's lien by filing a bond. The lien comes off the property and attaches to the bond instead, which means title clears and the transaction can close while the underlying dispute continues separately. Bonds cost money and require an attorney to arrange.
Escrowing the disputed amount. Where a title company will accept it, funds equal to the claim can be held in escrow at closing and released when the dispute resolves. Whether an underwriter will insure over a particular situation is their decision, and it's worth having the attorney raise it early — the same question that governs selling a property in litigation.
Negotiated settlement. Lienholders frequently accept less than claimed, particularly where the claim is contestable or the lien's remaining life is short.
The point is that "resolved" has several meanings, and a seller who believes a lien is unjustified shouldn't assume paying it in full is the only path to closing.
Tax Liens Run on Their Own Schedule
Federal tax liens are the scheduling problem in this category.
Where a federal tax lien attaches to a property being sold, the IRS has established procedures for issuing a discharge of the lien as to that property, or a subordination — each with its own application, documentation, and review.
The review takes time. The commonly cited lead time is around 45 days, and the application should be submitted well in advance of a target closing. A seller who discovers a federal tax lien after contracts are signed has discovered a timeline problem more than a money problem, particularly where a mortgage commitment clock is running.
State tax liens have their own procedures and their own timelines.
The instruction is the same as everywhere else on this page: find it before listing. Six weeks of lead time is comfortable. Six weeks under a contract deadline is not.
What Not to Do
One option gets presented as a choice and shouldn't be.
Selling "subject to" a lien — leaving it in place for the buyer to deal with — is technically possible with a cash buyer willing to accept the risk. In practice it's a distressed-sale route: a financed buyer can't do it because their lender requires clear title, the pool narrows to investors, and the lien becomes leverage in the price negotiation.
It's an option in the sense that a short sale is an option. Not something to choose when the alternative is resolving the lien with a few weeks of lead time.
Where liens exceed proceeds, the situation is genuinely different — that's short sale territory, requiring each lienholder to agree, and it belongs with an attorney and a CPA early.
A Worked Example
Consider a composite case — a Port Washington seller whose pre-listing title search turned up two things she didn't expect.
A contractor's lien from a kitchen renovation eighteen months earlier, filed after a dispute about completion. And a judgment lien from a medical billing matter she'd settled years before and assumed was closed.
Her attorney examined both. The mechanic's lien had been filed and not extended, and no foreclosure action had been commenced — which materially changed the conversation with the contractor. They settled for substantially less than claimed.
The judgment turned out to have been satisfied, but the satisfaction was never filed. Obtaining and recording it took five weeks of correspondence with a creditor's counsel who had moved firms twice.
Both were resolved before she listed. Discovered during a buyer's title search instead, either one would have put a closing date at risk.
Where to Start
Have your attorney run a title search before listing. Assume there's something you've forgotten and something you never knew about.
For anything that surfaces, ask three questions: what is it, is it still enforceable, and what does releasing it require. Those have different answers for a mechanic's lien, a judgment, and a federal tax lien, and the answers determine both the cost and the timeline.
Where you believe a lien is wrong, ask about bonding or escrowing rather than assuming you have to pay it. Where a federal tax lien exists, start the discharge application early.
Sellers wanting a read on where the property sits can begin with a quiet look at current value.
The Honest Bottom Line
A lien complicates a sale and rarely prevents one. Most are satisfied from proceeds at closing and nobody thinks about them again.
What's worth knowing is that not every lien is a fixed obligation. Some have expiration dates. Some can be bonded off or escrowed while a dispute continues. Some were satisfied years ago and simply never released. A seller who assumes the number on the lien is the number they owe may be paying more than necessary.
And all of it is easier with lead time. A title search before listing turns a closing-day crisis into a six-week project.
For anyone working through what's actually on their title, with no pressure attached, that conversation is available whenever the timing suits.
This is general information, not legal advice. Lien durations, filing requirements, extension procedures, bonding, discharge processes, and enforceability all turn on the specific lien and current law. Consult a licensed New York real estate attorney about your circumstances.
FAQs
Can I sell a home with a lien on it?
Yes, and most liens are satisfied from proceeds at closing without complication. The buyer's lender and title company require clear title, so liens generally have to be released before the deed transfers — but "released" doesn't always mean "paid in full." Some liens have expired or are close to it, some were satisfied and never formally discharged, and disputed ones can sometimes be bonded off or escrowed so the transaction closes while the dispute continues. Have an attorney examine what's actually there.
Do mechanic's liens expire in New York?
They have limited lives, which is the most useful thing a seller facing one can know. Under New York's Lien Law a mechanic's lien must be filed within a defined window after the last work or materials — shorter for a single-family dwelling than for other property — and once filed it remains valid for a period, commonly stated as one year for a private improvement, unless the lienholder obtains an extension or commences a foreclosure action. Whether a particular lien was timely filed, extended, or is near expiration are attorney questions that change what a reasonable settlement looks like.
What if I think a lien is wrong?
You don't necessarily have to pay it to close. New York provides procedures for discharging a mechanic's lien by filing a bond — the lien comes off the property and attaches to the bond, so title clears and the sale proceeds while the dispute continues separately. Escrowing the disputed amount at closing is another route where the title company will accept it. And lienholders frequently settle for less than claimed, particularly where the claim is contestable or the lien's remaining life is short.
How long does it take to clear a federal tax lien?
Longer than most sellers expect. The IRS has established procedures for discharging a lien as to a specific property being sold, or subordinating it, each with its own application and review — and the commonly cited lead time is around 45 days. A seller who discovers a federal tax lien after contracts are signed has found a timeline problem more than a money problem, especially with a mortgage commitment clock running. Start the application well before a target closing.
Should I sell "subject to" a lien instead of clearing it?
Generally no. It's technically possible with a cash buyer willing to accept the risk, but a financed buyer can't do it since their lender requires clear title. The pool narrows to investors, and the lien becomes leverage in the price negotiation. It's an option in the sense that a short sale is an option — not something to choose when the alternative is resolving the lien with a few weeks of lead time. Where liens genuinely exceed proceeds, that's a different situation requiring each lienholder to agree.
By Eric Berman, REALTOR® | The Eric Berman Team at Compass
Eric Berman | Long Island & Queens Associate Broker | Compass
1468 Northern Blvd, Manhasset, NY 11030
(917) 225-8596 | eric@ericbermanre.com | theericbermanteam.com
