Can you sell a house with a lien on it in Indiana?

Updated: November 6, 2026 · By Mark Dietel, Broker/Owner, Mark Dietel Realty · 10-minute read

Quick answer: Yes. Mark Dietel Realty tells Central Indiana sellers that a lien does not stop a sale. Most liens get paid from your proceeds at closing. How fast depends on the type: a federal tax lien can need an IRS request at least 45 days before closing. If liens exceed the price, creditors must approve the sale.

What we analyzed: Indiana Code 34-55-9-2 (judgment liens), Indiana Code 32-28-3-3 (contractor's liens) and IRS Publication 783 (federal tax lien discharge), read on November 6, 2026. Laws change, so confirm current wording with an attorney.

Many sellers who find a lien on their house decide the sale is over. The type of lien decides what happens next and how long it takes. A mortgage and most judgments clear at the closing table. A federal tax lien can need a request to the IRS, which asks that you file it at least 45 days before the closing. Sellers tend to learn that timing late, so we look for liens before a house is listed.

Key takeaways

• A lien is a creditor's claim on your house, and it leaves your right to sell in place.
• Your mortgage is a lien, and nearly every sale pays one off, so the open question is what else is on the house.
• Each lien type clears a different way, and the federal tax lien has the longest lead time.
• If the liens total more than the sale price, you need a plan before you list.

Does a lien stop you from selling your house in Indiana?

No. A lien is a creditor's legal claim on your house for a debt. It leaves your right to sell in place, and it means the buyer, the buyer's lender and the title company will want the claim paid or released, because they want clear title when the house changes hands.

"Clear title" means no one else has a recorded claim on the house. Nolo's Indiana guide on judgment liens says a buyer or lender will insist on clear title, so the owner usually has to deal with the lien before selling. Our read is that the same holds for any recorded lien, which is why the title search comes first.

So the working question for a seller is simple. Which claims are on the house, who holds each one, and what does each one cost to clear? Once you have that list, the sale becomes arithmetic and phone calls.

How do you find out what liens are on your house?

Order a title search, which is how a title company reads the county records for your address. The company reports what it finds in a title commitment. You can get this before you list. Ask us or a title company for a preliminary search so you see the liens before a buyer does.

Liens live in more than one place, which is why a search matters. In a county like Johnson County, where we work from our Greenwood office, the records sit in different offices. The county recorder holds mortgages, home equity loans, contractor's liens and recorded federal tax liens. The county clerk keeps the judgment docket, which lists money judgments that creditors won in court. The county treasurer shows property taxes owed on the parcel. Your homeowners association, if your neighborhood has one, tracks unpaid dues or assessments. A Marion County house on the Southside follows the same pattern with that county's offices.

Your own mail also tells you something. Court papers, a notice from the IRS or a letter from a contractor about an unpaid bill all point to a possible lien. Write down every one of them before the search so you can match them to what the title company finds.

Searches can also turn up a lien that belongs to someone with a name like yours. If you see a claim you do not recognize, tell the title company right away. Ask the title company how it would clear a wrong match, and do that before you have a contract so the closing date is not at risk.

Which kinds of liens can be on an Indiana house?

The common ones are a mortgage or home equity loan, unpaid property taxes, a judgment lien, a contractor's lien, an HOA lien and a federal tax lien. Each gets onto the house a different way and clears a different way. The table sorts them by what you do about each one.

A few of these deserve more words. A judgment lien starts with a lawsuit. The creditor wins a money judgment, and under Indiana Code 34-55-9-2 that judgment becomes a lien on your real estate in the county where it is entered and indexed. The statute applies to money judgments in general, whatever the original debt was.

A contractor's lien starts with unpaid work. Under Indiana Code 32-28-3-3, a claimant files a notice with the county recorder, generally within 90 days after performing the labor or furnishing the materials. The statute sets a shorter 60-day deadline for some types of structures. If you hired someone to work on the house in the past year and any bill is open, check it.

A federal tax lien starts with unpaid federal taxes. We are not tax advisers, so for any IRS matter we point sellers to a CPA or a tax attorney early. The calendar is the issue: the IRS discharge process takes review time, and a closing date will not shorten it.

How does a lien get paid when you sell the house?

The title company collects a payoff amount from each lienholder and pays each one from your sale proceeds at closing. The lienholder then records a release. You see every payoff as a deduction on the settlement statement you sign, so you know what is left for you.

Here is the order of events on most sales with liens:

1. The title company searches the records and lists every lien it finds.
2. You and your agent review the list and mark each lien as correct, disputed or unknown.
3. The title company requests a payoff letter from each lienholder. Payoff letters carry an expiration date, and a mortgage payoff includes daily interest.
4. The settlement statement shows each payoff as a deduction from the sale price.
5. At closing, the title company sends each payment from your proceeds.
6. Each lienholder records a release, which removes the claim from the county records.

Some sellers settle a judgment before closing by negotiating with the creditor, who may accept a payoff in return for a release. Nolo's Indiana guide describes a settlement with the creditor as the usual way to resolve a judgment lien. Any agreement like that belongs in writing, and an attorney should read it before you sign it, because a promise made on the phone leaves the record unchanged. Each lienholder has its own payoff process, so request the letters as soon as you have a list.

What if the liens add up to more than the sale price?

Then the sale needs a plan before you list. Your options are to bring cash to closing, to settle some liens for less with each creditor's written agreement, or to ask your mortgage lender to approve a short sale. An attorney should review the plan, because the right answer depends on the type and size of each lien.

A short sale means the mortgage lender agrees to accept less than the full payoff. It needs the lender's approval, and our read is that it does not by itself clear other liens on the house, so ask your attorney how each one would be handled. If your situation is that the mortgage is larger than the value, read our guide, I owe more than my house is worth in Indiana: now what?, then come back here for the other liens.

Several things can slow a sale with liens, and knowing them lets you plan the calendar.

• A federal tax lien discharge: the IRS asks for the application at least 45 days before the transaction date.
• A disputed contractor's lien: if you and the contractor disagree about the work or the amount, the claim may need a lawyer or a court before it is released.
• A slow payoff letter from an HOA or a creditor pushes the closing date.
• A lien in the wrong name: ask the title company what it needs to correct a records mix-up.
• An open court case: if a judgment is under appeal or a court has an order on the house, ask your attorney what must happen before closing.

The lien types in this guide are the common ones. Other claims exist, such as state tax claims or support obligations, and the title search and an attorney will tell you which apply to you.

Should you list now, or clear the lien first?

Listing now works when every lien is small enough to be paid from the sale price and the payoff letters are quick to get. You keep your timeline, and the buyer's title work finds the same list you already hold. Clearing a lien first works when a lien is disputed, a court is involved or a federal tax lien needs the IRS discharge. A discharge request filed early keeps the buyer's closing date realistic.

Our read is that the middle path works for many sellers: list once you have the full lien list, the payoff amounts and an attorney's opinion on any dispute. We do not predict prices or timing, so the choice rests on your numbers and your calendar.

If you are in a bankruptcy case, or a court has issued an order about your house in a divorce, talk to your attorney before you list. Those situations have their own rules about who must approve a sale.

What does this look like in Central Indiana?

Here is a hypothetical example, not a real sale. A homeowner in Greenwood lists a house for $300,000 and gets an offer at that price. The title search finds a mortgage, a judgment lien from an old debt and a contractor's lien from a bathroom remodel. Property taxes are also due. The table below shows how the payoffs come out of the sale price in Scenario A. Scenario B shows a lower price with a bigger mortgage payoff.

In Scenario A, every lien gets paid at closing and money is left over. The seller still has to subtract the last line to see the final amount. In Scenario B, the payoffs are bigger than the price. The seller would need to bring cash, settle the judgment for less with the creditor's written agreement, or ask the mortgage lender about a short sale.

Both outcomes come from the same house, with a different price, a different mortgage balance and different liens. We ask for the full list of liens before we talk about a price.

What should you do first if you find a lien?

Start by listing every claim and get an attorney's help for the ones that involve a court or the IRS. Then request payoff amounts and ask for a written net sheet that includes them. The steps below put the work in order.

1. Get the full list. Ask for a title search before you list. Write down each lien, who holds it, the amount, and the date it was recorded.
2. Sort the liens. Mark each one as a mortgage or loan, a tax, a judgment, a contractor's claim, an HOA claim or a federal tax lien.
3. Call the right professional. Judgments, disputed contractor's liens and IRS matters call for an attorney or a CPA. They know what you can settle and what you cannot.
4. Request payoff letters. Ask each lienholder for a written payoff amount and a date it is good through.
5. Build a net sheet with the payoffs in it. A net sheet is a written estimate of what you would walk away with. It should list each payoff, the other costs and your negotiated agent compensation. See what a seller net sheet in Indiana contains.
6. Choose the route. Depending on the numbers, the route may be to list the house, to settle a lien first, or to wait until a dispute is resolved. Our guide to cash offers, listings and guaranteed sales compares the sale routes side by side.
7. Pick a title company early. The title company does the searching and the payoffs, so choose one with care.

When this doesn't apply

This guide covers a person who owns a house in Indiana and wants to sell it while liens are on it. It does not cover every case.

• Only a mortgage: if the only claim on your house is a mortgage, you do not have a lien problem. You request a payoff and the title company handles it at closing.
• The house is in a trust, an LLC or an estate: who can sign and who must approve changes. Talk to an attorney first. Our guide on inheriting a house in Indiana covers the estate side.
• A bankruptcy case is open: the court and the trustee may have to approve a sale. Your attorney leads in that case.
• The lien is in another state: the rules in this guide are Indiana rules. A lien recorded elsewhere follows that state's law.
• You are a buyer: this guide is for sellers. A buyer reads the title commitment with the title company and the buyer's attorney.

We are a real estate team, so we can tell you what a lien does to a sale and what the sale numbers look like. How to settle a debt is a question for an attorney or a CPA.

What to do next

If you know about a lien, or you suspect one, ask us for a plan before you list. We will line up the title search, lay out each payoff and show you the sale numbers with every claim in them.

Prefer to talk? Call (317) 426-9911. Mark Dietel Realty has offices in Southside Indianapolis, Greenwood and Bloomington.

Read next

• Can you sell a house as-is in Indiana without fixing anything?
• Why do title problems delay closings in Indiana?
• What do I need to disclose when selling my Indiana home?
• What happens after I accept an offer on my house in Indiana?

Frequently asked questions

Can a title company close if I cannot pay a lien yet?

Usually the lien has to be paid, released or covered by an arrangement the buyer's lender and the title company accept. A written agreement with the creditor can sometimes do that. Ask the title company early what it will need to see before the closing date.

Does a judgment against me always attach to my house?

A money judgment becomes a lien on real estate in the county where the judgment is entered and indexed in the judgment docket, under Indiana Code 34-55-9-2. Whether a particular judgment reaches your house depends on the county and the debt. Have the title search confirm it.

How long does a judgment lien last in Indiana?

The statute says the lien lasts until ten years after the judgment, not counting time when the creditor was held back by an appeal, an injunction, the defendant's death or an agreement entered of record. An attorney can tell you the exact end date for a specific judgment.

How long does a contractor have to file a lien on an Indiana house?

Generally 90 days after the work was done or the materials were furnished, filed with the county recorder, under Indiana Code 32-28-3-3. The statute sets a 60-day deadline for some types of structures. If a bill is disputed, an attorney should read the filing.

Can I sell my house if I owe the IRS?

Often yes, but the IRS lien has to be handled. The proceeds may pay it, or you can apply for a certificate of discharge on Form 14135. IRS Publication 783 asks for the application at least 45 days before the transaction date. A CPA or tax attorney should lead.

Will a buyer see the lien?

Yes. Recorded liens normally appear in the title search the title company runs for the buyer's title insurance. It is better to find it first and show the buyer how it will be paid, and your attorney can advise on anything else to share.

Do I have to list a lien on the Indiana seller's disclosure form?

Indiana's seller disclosure form asks about the condition of the property and known defects, and liens will show in the title work. Your listing agent and attorney can tell you what else to share with the buyer. See our guide on what to disclose.

Can I sell as-is with a lien on the house?

Yes. An as-is sale and a lien are separate issues. As-is describes the house's condition, and the lien describes a debt secured by the house. Both have to be handled at closing. Our guide on selling as-is in Indiana explains the condition side.

This is general information, not legal or tax advice. Confirm your situation with an attorney, a CPA or your county recorder. Dollar figures in the worked example are hypothetical.

Mark Dietel Realty - offices in Indianapolis (Southside), Greenwood and Bloomington, Indiana.

Sources

• Indiana Code 34-55-9-2, liens upon real estate and chattels real (FindLaw): https://codes.findlaw.com/in/title-34-civil-law-and-procedure/in-code-sect-34-55-9-2/
• Indiana Code 32-28-3-3, mechanic's lien filing (Justia): https://law.justia.com/codes/indiana/2020/title-32/article-28/chapter-3/section-32-28-3-3
• IRS Publication 783, Instructions on How to Apply for Certificate of Discharge of Property From Federal Tax Lien (archived copy): https://webarchive.library.unt.edu/web/20130214052505/http://www.irs.gov/pub/irs-pdf/p783.pdf
• Nolo, Judgment Liens on Property in Indiana: https://www.nolo.com/legal-encyclopedia/judgment-liens-indiana-46832.html