Liens on a House in Washington: What Clears at Closing
Mortgages, tax liens, contractor liens, judgments — what happens to each when a home sells, and which ones can follow the property to a new owner.
A lien is a creditor’s recorded claim against a property — a legal sticky note saying “this house owes me money.” Nearly every home sale involves at least one (the seller’s mortgage), and escrow’s quiet superpower is making them disappear: collecting payoff figures, deducting them from the seller’s proceeds, and recording releases so the buyer takes title clean. When that machinery works, nobody notices. This post is about understanding it well enough to notice when it might not.
The liens you’ll meet, in rough order of seniority
- Property taxes. Generally the most senior claim on the property — unpaid taxes get paid through closing before anyone else sees a dollar.
- Mortgages (deeds of trust). First mortgage, then any second/HELOC, paid off in priority order from the sale proceeds. (Washington uses deeds of trust rather than true mortgages — same role here.)
- Construction/mechanic’s liens. Contractors and suppliers who weren’t paid can record claims against the property — notable because in some circumstances they can attach based on when work occurred, surfacing after you’d think the books were closed. Recent renovation + seller under financial stress = ask more questions.
- Judgment liens. Court judgments against the owner can attach to their real estate.
- HOA/condo liens. Unpaid dues and special assessments become liens with collection teeth.
- Tax liens (state/federal). Income-tax liens follow the taxpayer’s property and involve their own payoff bureaucracy — they resolve at closing, just more slowly.
Priority rules have exceptions and wrinkles; the working principle for a buyer is simpler: everything recorded must be released or insured around before you take title, and the title commitment is where the full list lives.
What actually happens at closing
Escrow orders payoff statements from every lienholder, lines them up against the sale price, and pays them from the seller’s side of the ledger at recording. The seller’s net proceeds are what’s left. Two situations complicate the script:
- The liens exceed the price. If payoffs outrun proceeds, the seller must bring cash to close, negotiate reductions, or the deal becomes a short sale — a different process with the lender’s approval at its center and a much longer clock.
- A lien is disputed. Sellers sometimes contest a contractor’s claim or an old judgment. Disputes take time; escrow can sometimes hold funds in reserve while the fight resolves — but only with everyone’s written agreement, and your closing date is the hostage.
What buyers should actually do
Read Schedule B-1 (“requirements”) of the title commitment — it’s literally the list of what must be cleared for you to close — and ask the escrow officer about anything that looks exotic. If the seller’s situation suggests hidden claims (recent unpermitted work, contractor disputes mentioned at the open house, a divorce or estate sale), say so out loud to your agent and the title officer; title companies investigate better when pointed. Your owner’s title insurance policy is the backstop for what everyone misses — one more reason not to waive it.
The honest take
Liens are a seller problem that becomes a buyer problem only through inattention. The system — title search, escrow payoffs, title insurance — clears the routine cases invisibly. Your job is the ten minutes of reading that catches the non-routine case while your contingencies still have teeth.
Escrow and title don’t shop themselves, and neither do agents — fees vary everywhere in this transaction. Manaky Homes starts with the biggest line: Greater Seattle agents publishing their fees side by side, free to compare. Join the waitlist.
