Sell a House with Liens or Unpaid Taxes in Arkansas

Step 1

Find every claim that could affect the sale

A lien is a legal claim against property; the debt is the underlying obligation. A tax bill, mortgage statement or county website alone is not a complete title search. Ask a title company for a preliminary title examination and a list of requirements for an insurable transfer.

Collect the deed, legal description, parcel ID, all notices, court papers, loan account information, tax receipts and earlier releases. Ask the closing professional to check previous names and the names of every owner. Public records are a starting point; validity, priority and unrecorded issues require professional review.

Step 2

Check whether the taxes are with the county or COSL

Arkansas counties collect ordinary property taxes. Delinquent real estate can be certified to the Commissioner of State Lands for collection and sale. Certification changes the title situation, so the closing professional should confirm the redemption and conveyance steps before scheduling a private sale.

Ask COSL for the full redemption amount, including taxes, penalties, interest, fees and costs. Confirm which years it covers. Do not count those same tax years again in the county balance. Check current county taxes, personal-property payment requirements, city charges and special assessments separately.

Redemption makes the taxes current but does not transfer ownership to the person paying them. Paying another owner’s tax bill is not a purchase. If the parcel sold, also ask COSL about any excess proceeds, required proof and applicable claim deadline.

Sources: Current COSL rules, 26 CAR Part 400; parcel search; COSL FAQs. Verify your parcel rather than relying on a generalized years-to-auction timeline.

Step 3

Use a written payoff and release plan

1. Open title work early. Give the closing professional every known claim, ownership issue and deadline. Ask which title exceptions must be cleared and who is responsible.
2. Obtain written figures. Request payoffs valid through the proposed closing date. Confirm additional daily interest, fees, current taxes and payment delivery requirements.
3. Resolve approvals before relying on a closing date. Reduced payoffs, mortgage short sales, IRS discharges and disputed liens each need their own acceptance or documentation. A buyer cannot approve them for the creditor.
4. Review the settlement statement. Check the price, each debt payment, seller expenses, tax prorations and remaining proceeds. Confirm how the closing professional will handle state redemption and recording.
5. Keep the proof afterward. Retain the final settlement statement, payment confirmations, recorded satisfactions/releases and any written debt waiver. Ask who tracks documents that record after closing and obtain copies.

Sources: IRS: understanding a federal tax lien; IRS Publication 783.

Step 4

What if you owe more than the house will sell for?

A sale needs enough funds for the payments and expenses required to close, or documented approvals for another arrangement. A negative estimate is a planning signal, not permission to leave a creditor unpaid.

When a mortgage short sale may be needed

If the sale will not fully pay the mortgage, contact the servicer about its short-sale process. It may require financial information, valuation, a purchase agreement and approvals from other lienholders. Obtain any mortgage deficiency waiver in writing. Approval to release the mortgage lien does not by itself prove the remaining balance was waived. Ask an Arkansas attorney about your contract and applicable deficiency rules.

Example: A $200,000 sale with $205,000 of required debt and tax payments plus $8,000 of selling costs has a $13,000 potential shortfall. You would need additional funds or creditor-approved changes for that proposed closing to work. A lower cash offer could increase the gap even if it reduces repair and commission costs.

A reduced payoff or forgiven balance may have tax consequences. Ask a tax professional which current exceptions or exclusions apply; do not assume all canceled mortgage debt is tax-free.

Sources: CFPB: short sales and written deficiency waivers; IRS: canceled debt. Related guide: selling a house through a short sale.

Step 5

What if the lien or tax bill is wrong—or already paid?

Tell the title company immediately. A paid balance and a recorded release are different pieces of evidence, and a similar name can create a mistaken match.

• Wrong parcel or mistaken identity: compare the owner’s name, legal description, parcel number, court case and recording details. Supply identity information securely to the professional reviewing the mismatch.
• Disputed assessment or charge: contact the assessor for valuation/exemption issues, the collector for billing/payment issues, or the creditor for a lien dispute. Ask for the correction process, evidence required and actual appeal deadline.
• Already paid: provide receipts, canceled checks or bank confirmations, settlement statements, payoff correspondence and recorded documents. Request the missing satisfaction or release from the creditor and follow its recording status.
• Creditor cannot be located or refuses to correct it: ask an Arkansas attorney and the title company what formal remedy is needed. An affidavit or your proof of payment may not be enough by itself.

Do not assume a dispute pauses collection or a tax sale. Ask the responsible office and your attorney what actually changes the deadline, and obtain confirmation.

Step 6

Should you keep the house, list it, or sell directly?

Compare a realistic net figure and a workable timeline. Selling may solve the property problem, while a sustainable payment arrangement could help you keep the home.

Arkansas relief and payment options to check first

• Homestead credit: ask your assessor about eligibility and the correct tax year. The credit is up to $600 for 2025 assessments payable in 2026; the enacted increase to $675 applies to assessment years beginning in 2026, generally payable in 2027. A credit is not a blanket cancellation of old taxes.
• Age 65 or disability assessment freeze: ask about the Amendment 79 benefit. It concerns taxable assessed value, not a permanently fixed tax bill; millage changes and other exceptions can affect the amount.
• Current-tax installments: availability and conditions depend on the collector. Pulaski allows installments for current taxes but requires past-due taxes in full. COSL redemption requires full payment; do not assume a partial-payment arrangement stops a sale.
• Qualifying disabled veterans: ask COSL about the statutory exemption from the specified annual redemption penalty and required proof. It does not automatically eliminate taxes, interest, costs or the redemption deadline.
• Mortgage or federal-tax payment options: contact the servicer or IRS directly about arrangements that may fit your finances. A repayment plan does not automatically clear a recorded lien for a sale. A HUD-approved housing counselor can help with foreclosure options.

Sources: Act 330 of 2025; Act 174 of 2026; Benton Amendment 79 benefits; Pulaski tax-payment FAQs; Act 259 of 2025.

Step 7 • Interactive preparation tool

Estimate net proceeds and build your verification checklist

Sale price − required payoffs and taxes − selling, preparation and carrying costs = estimated net proceeds

Run the calculator once for a proposed listing and again for a written cash offer. Use the costs you would actually pay under each agreement. The tool shows the balance before repairs and holding costs, plus the overall net after those expenses. A negative overall net caused by expenses paid before closing is different from a closing-day funding gap; confirm the actual amount needed with the closing professional.

Use a confirmed payoff when possible. Enter zero only when you have confirmed that nothing is due. A blank amount remains unknown. For an IRS lien or negotiated debt, ask the closing professional what approved amount should be included; the tool cannot decide lien priority or the amount an agency will accept.

The estimate excludes personal capital-gains/canceled-debt income taxes, moving costs and unknown claims unless you specifically include an appropriate cost. Tax prorations and transfer/recording charges should be checked against a real seller net sheet. A positive number does not establish clear title, creditor approval or authority to sell.

Step 8

How long can resolving liens take?

There is no reliable single timeline. A straightforward payoff can be coordinated with closing; a disputed lien, missing release, short sale, estate document or agency approval can require repeated requests and extra review. Ask each responsible party for its present turnaround time and build the schedule around the slowest required item.

IRS timing: Publication 783 asks for a discharge application at least 45 days before the transaction date when the certificate is needed. That is advance submission guidance, not a guaranteed approval or closing timeline. Missing documents or further review can change the schedule.

Keep a written tracker: requested payoff date, expiration, daily interest, application status, missing documents, approval conditions and person responsible. Where a tax sale is approaching, confirm the exact receipt cutoff with COSL; a target closing date does not protect the property. Get any actual postponement or legal protection confirmed by the appropriate authority.

Source: IRS Publication 783 and Form 14135 instructions. Mortgage foreclosure is a separate process; see our foreclosure options guide.

Step 9

Inherited property, co-owners, divorce or bankruptcy

Sources: U.S. Courts: discharge and surviving liens; bankruptcy estate administration. Your case, ownership documents and Arkansas legal advice determine the required steps.

Step 10

Official Arkansas county contacts

Collector/treasurer: balances, receipts and tax-payment status. Assessor: parcel details, valuation and exemptions. Recorder/land-records office: recorded deeds and liens. Relevant judgments may also need a separate court-record search.

These are starting contacts for six major counties. For another county, start with the Association of Arkansas Counties directory, then verify the collector, assessor and land-records office through that county’s official website. A parcel number and the tax years will make your inquiry more useful.

When contacting the office, ask: “Is this parcel still with the county or certified to COSL? Which years are included? Has it sold? What amount, documents and payment method are required, and when must they be received?”

Step 11

Avoid debt-removal and foreclosure-rescue scams

The FTC warns about guarantees of stopping foreclosure or obtaining a modification, advance mortgage-relief fees and requests to transfer the deed. Signing away ownership does not itself remove your mortgage debt.

• Reject guarantees that a buyer or “rescue” service can erase every lien or make you eligible for forgiveness.
• Ask for an itemized explanation of every fee, the buyer’s identity, verifiable proof of funds and all cancellation/assignment terms.
• Use an independent title company or attorney. Confirm the office and payment instructions through contact details you obtain yourself.
• Do not sign a rescue deed under pressure or send unexplained upfront fees. A legitimate purchase should have a clear contract, documented settlement, approved payoffs and an understood transfer of ownership.
• Get creditor approvals and important buyer promises in writing. Do not rely on a verbal claim that “the taxes will be handled.”

Sources: FTC foreclosure scam warning; FTC mortgage relief scams. Read our cash buyer scam guide.