Cash-Out Refinance With a Lien on Your Home in 2026: IRS Tax Liens, Judgments, HOA Liens, and Solar UCC Filings
FACT-CHECKEDFACT-CHECKEDA cash-out refinance records a new first mortgage against your home, and it can't take first position while an IRS lien, judgment, HOA lien, or solar UCC filing sits ahead of it. Each lien type has a different fix and a different cost in time and cash, and the order you handle them in decides your closing date.
Key Takeaways
- A new first mortgage can't record in first position until every senior lien is paid, released, or subordinated.
- Once a Notice of Federal Tax Lien is recorded, an installment agreement alone won't avoid payoff at closing.
- The IRS asks for a subordination application at least 45 days before closing, and approval isn't automatic.
- Judgments, mechanic's liens, and HOA liens are paid through the settlement statement at or before closing.
- A solar loan's UCC-1 fixture filing must be released or subordinated before your new loan can close in first position.
Why a Lien Changes the Order of Operations
A lien is a recorded claim against your home. An IRS lien, a court judgment, unpaid HOA assessments, an unpaid contractor's bill, or a solar loan's fixture filing each sits in the county land records with a recording date. Every one of them has to be paid, released, or subordinated before your new mortgage can record in first position, with no other claim ahead of it.
In my years on the operations side, I've come to think of the mortgage process as two halves. The loan officer's half is finding the right product and program for what you're trying to accomplish. The operations half is everything after that, and title work lives there. On a clean file, title runs in the background while income, credit, and assets get approved. On a file with a lien, title moves to the front and sets the timeline.
Fannie Mae's Selling Guide is the reason the sequencing matters. Section B3-6-07 requires delinquent credit to be paid off at or before closing. Its list includes taxes, judgments, tax liens, mechanic's or materialmen's liens, and any lien that could affect the lender's position or eat into your equity. That rule governs conventional loans sold to Fannie Mae, and other loan programs write their own versions. In practice, the settlement statement has to show every senior lien handled, or the new loan doesn't record the way the lender needs it to.
Where this typically goes wrong is sequencing. The workflow I helped design at AmeriSave approves income, credit, and assets first and lets the third-party items follow, meaning the appraisal, the title work, and the payoff demands. That order is right for most files because it gets you a real approval in days instead of weeks. If you already know there's a lien on your home, though, I'd pull the title search forward to the week you apply. The lien is the hard thing on your file, and the hard thing goes first.
IRS Tax Liens: Payoff, Subordination, and What an Installment Agreement Does
Can you refinance with a tax lien? Yes, and the path depends on one fact: whether the IRS has filed a Notice of Federal Tax Lien in the county where your home sits.
The IRS's own explainer on federal tax liens lays out how that filing comes to exist. The IRS assesses the tax, sends you a Notice and Demand for Payment, and if the balance goes unpaid, files a public Notice of Federal Tax Lien. That filing is what a title search picks up.
If no Notice of Federal Tax Lien has been filed
If you owe back taxes, you're on an approved IRS installment agreement, and nothing has been filed in the county records, the conventional rule is workable. Fannie Mae's Selling Guide B3-6-05 lets the lender include your monthly installment payment in your debt-to-income ratio instead of requiring payoff, as long as there's no indication a Notice of Federal Tax Lien has been filed against you in the county where the property is located. Your lender will want the agreement itself and proof you've been making the payments. That's an income, credit, and assets question, and it moves at the speed of your documents.
Once the lien is recorded: payoff or subordination
The moment a Notice of Federal Tax Lien is on record, the same Fannie Mae rule flips. The delinquent federal tax debt must be paid in full at or before closing, and an approved installment agreement doesn't override that requirement. I want to be plain about this, because I've seen files stall on it in both directions. Some borrowers assume the agreement exempts them from payoff. Others, with no notice recorded, assume they have to pay the IRS off when the debt-to-income path was open the whole time. An installment agreement in good standing is a real asset on your file when no lien is recorded. Once the lien is recorded, the agreement by itself doesn't keep you from paying the IRS off out of your proceeds.
What changes the picture is subordination. Subordination leaves the tax lien in place and moves your new mortgage ahead of it in priority. The IRS describes it in those terms in its explainer: the lien stays, but another creditor moves ahead of the IRS, which can make it easier to get a loan or mortgage. A discharge is the stronger remedy, removing the lien from a specific piece of property entirely, and it's a separate application. For a cash-out refinance where you want to keep paying the IRS on your existing schedule, subordination is the mechanism to ask about.
Two cautions belong here. First, your lender has to accept a subordinated federal tax lien under its own program guidelines, so confirm that path with your loan officer before you file anything with the IRS. Second, approval is at the IRS's discretion, and the IRS decides which of its two routes applies to you.
How the IRS calculates what it needs
IRS Publication 784 describes two routes under Internal Revenue Code Section 6325(d). Under 6325(d)(1), the IRS issues the certificate in exchange for a payment equal to its interest in the property. Publication 784 works the math with its own example: a home worth $200,000, a new loan at 80% loan-to-value for $160,000, an existing mortgage payoff of $145,000, and closing costs of $4,800 at 3% of the new loan. The equity left after the payoff is $15,000, and after closing costs it's $10,200. That $10,200 is what the IRS would require in exchange for subordinating in that example. Under 6325(d)(2), no payment is required if the IRS determines the subordination will increase the amount it ultimately collects and make collection easier, for example when a refinance lowers your housing payment enough that more goes toward the tax debt each month.
Read those two routes from a cash-out borrower's seat. Under (d)(1), the IRS is looking at the same equity you're trying to pull out, and its calculated interest can consume a meaningful share of it. Under (d)(2), you keep the cash, but only if the IRS agrees the refinance improves its collection position. Which route you land on is the IRS's call, and it's decided case by case.
The 45-day clock and what Form 14134 needs
Publication 784 asks you to submit the application at least 45 days before the transaction date you need the certificate for, to allow time for review, determination, notification, and delivery of the documents. That's a filing lead time and the IRS's stated minimum, so I treat it as the floor when planning a file. Approval isn't automatic, and the IRS doesn't publish a guaranteed turnaround.
The application is Form 14134. It asks for a current title report listing every encumbrance senior to the federal tax lien, a proposed closing statement itemizing all costs, a valuation of the property, and the proposed loan agreement. If any mortgage on title is a home equity line of credit, the form also asks you to document any advances taken from the 46th day after the Notice of Federal Tax Lien was filed through the application date. The federal lien takes priority over HELOC draws made 46 or more days after the notice, so the IRS tracks them. That detail answers part of the question of whether you can get a HELOC with a tax lien or a home equity loan with a tax lien. The recorded notice creates the same priority problem for a second lien that it does for a first.
Set that attachment list against a normal refinance timeline. The title report, the closing statement, and the valuation ordinarily arrive in the middle of the process. To file with the IRS on day one, you need your lender to produce them on day one. That's why the title search moves to the front on a tax-lien file, and why I'd ask your loan officer, in these words, "Can we order title and a preliminary closing statement now so I can file Form 14134 this week?" A loan officer at AmeriSave can start those orders at application, and the file can sit in an approved-pending-title status while the IRS works.
Judgment Liens and Mechanic's Liens: Paid Through the Settlement Statement
If you're trying to refinance with a judgment lien on your house, the fix is simpler than the IRS process and it takes more of your cash. There's no subordination application for an ordinary judgment creditor comparable to Form 14134. Judgments sit on the same Fannie Mae list, Section B3-6-07, of delinquent credit that must be paid off at or before closing, and the standard way that happens is through the settlement statement. The title or settlement agent obtains a payoff figure from the judgment creditor, the amount comes out of your loan proceeds at closing, and the creditor records a release.
Where I see this go wrong is the payoff happening outside the closing. You pay the judgment directly, weeks ahead, and assume the file is clear. The judgment creditor cashes the check and files nothing. Title still shows the judgment, and now the settlement agent is chasing a release from a creditor who has already been paid and has no reason to hurry. The alternative is to leave the payoff inside the closing, where the release gets tied to the disbursement and the recording happens in the order the lender needs.
Mechanic's liens and materialmen's liens, the claims a contractor or supplier records when a bill on the home goes unpaid, sit on that same list and get the same treatment: paid at or before closing, usually from proceeds, with a release recorded. How a mechanic's lien gets its priority in the first place is a matter of state law and varies widely, so I won't generalize about it here. The lender's requirement that it be cleared before the new loan records is the constant.
HOA Liens and Super-Lien States
An HOA lien is the association's recorded claim for unpaid assessments. In most states it sits behind your existing first mortgage, and clearing it for a refinance works like a judgment. The settlement agent requests a payoff statement from the association, the balance comes out of proceeds, and the association releases the lien.
Some states give the association a priority position ahead of even a first mortgage, though only for a limited slice of the debt. Nevada's statute is one example. It gives the association priority over a first mortgage that was recorded before the assessment went delinquent, but only for part of the balance. That part is the assessments that would have come due in the 9 months before the association starts an enforcement action. If Fannie Mae or Freddie Mac rules require a shorter period, it shrinks, but never below 6 months. Colorado's Common Interest Ownership Act does the same for 6 months of assessments, measured back from the start of a foreclosure action by the association or a senior lienholder.
Those two states are the ones I can speak to with the statute in hand. Other states write their own rules, and many give the association no priority ahead of a first mortgage at all. If you're planning to refinance with an HOA lien on title, the new lender will require the association's payoff to run through closing wherever you live. In a super-lien state, the title company will take particular care that the priority portion is satisfied. A lien that could jump ahead of the new first mortgage is an exception the lender's title policy has to clear.
A tactical note from the processing floor at AmeriSave. If you're current on dues now but had a past-due stretch, ask the association's management company for a written statement of account before you apply. A lien that was paid but never released shows up on title just like an active one, and it takes a release from the association to clear it, which is easier to get when you have proof of payment in hand.
Solar Panel Liens: The UCC-1 Fixture Filing
Solar panel lien refinance questions come up far more often now than when I moved into operations, and the mechanics differ from a mortgage lien. When you finance panels with a separate solar loan, the solar lender often secures its interest with a UCC-1 financing statement filed as a fixture filing in the real estate records, the same county office where mortgages record. The UCC-1 gives public notice that the solar lender has a security interest in the panels attached to your home.
Fannie Mae's Selling Guide B2-3-04 addresses this directly. If a UCC fixture filing is in the land records in a position senior to the new mortgage, it must be subordinated so the mortgage closes in first-lien position. The instrument that does that is a UCC-3. A UCC-3 is the standard amendment form used to terminate, assign, continue, or otherwise change a UCC-1. The subordination version leaves the solar lender's filing in place and moves it behind the new mortgage.
On the processing side, the sequence looks like this. The solar lender has to sign the UCC-3, and neither the mortgage lender nor the title company can sign it on the solar lender's behalf. Someone has to request it, and the request has to reach the right department at the solar lender with the property description and the filing number from the title report. No source I can point you to publishes how long solar lenders take to turn that around, so treat the 2 to 4 weeks I use in the worked example below as a planning assumption, and start the request in week one.
The same Fannie Mae rule settles one more thing. If your panels are leased or under a power purchase agreement, meaning a third party owns them, their value can't be included in the appraised value of your home or in the loan-to-value and combined loan-to-value calculations. That won't block the refinance, but if you were counting on the panels to lift the appraised value that supports your cash-out, they won't. Either way, the solar agreement itself belongs in the file, because the appraiser and the underwriter both need to know who owns the equipment on the roof.
The Worked Scenario: Where the $80,000 Goes
Round numbers, purely to show the mechanism. Say you're targeting $80,000 in cash from a cash-out refinance, and the title search comes back with three items: an $18,000 IRS lien with a Notice of Federal Tax Lien recorded, a $9,000 judgment, and a $3,000 HOA lien. The house also has a solar loan with a UCC-1 fixture filing on record.
If all three liens are paid from proceeds at closing, the math is subtraction. $80,000 minus $18,000 minus $9,000 minus $3,000 leaves $50,000 in your pocket. The timeline barely moves, because payoffs through the settlement statement are routine, and the judgment and the HOA lien have no other path anyway.
If instead you file Form 14134 the week you apply and the IRS grants subordination under 6325(d)(2) without requiring a payment, the tax lien stays behind your new mortgage, your installment agreement keeps running, and you preserve $68,000 of the $80,000 after the judgment and HOA payoffs. The cost is time. You've built at least 45 days from filing into the schedule, and I'd plan for more, because approval isn't automatic and the IRS doesn't commit to a turnaround. If the IRS grants subordination under 6325(d)(1) instead, it will require a payment equal to its interest in the property, which could consume some or all of the $18,000 anyway. You'd know before closing, because the certificate spells out the terms.
The solar UCC-1 runs on a parallel track. Request the UCC-3 in week one and the 2 to 4 week planning assumption sits inside the IRS window. Request it after the appraisal, which is often when the filing first surfaces on a file, and those weeks land at the end of the process.
The table below puts the paths side by side.
| Path | IRS lien | Judgment and HOA lien | Cash you keep | Time added |
|---|---|---|---|---|
| Pay everything from proceeds | $18,000 paid at closing | $12,000 paid at closing | $50,000 | Minimal |
| Subordinate the IRS lien and keep the installment agreement | Stays on title behind the new loan, IRS approval required | $12,000 paid at closing | Up to $68,000 | At least 45 days from filing, more if the IRS takes longer |
| Either path with a solar UCC-1 on record | Same as above | Same as above | Same as above | 2 to 4 weeks (planning assumption) if requested late, largely absorbed if requested in week one |
The Order of Operations: What to Do in Week One
Everything above collapses into a sequence, and the sequence is the whole point.
Order the title search at preapproval. When you go through preapproval with AmeriSave or any other lender, tell your loan officer about every lien you know of before the credit pull, and ask that title be ordered at the same time. Title tells you which of the sections above applies to you, and getting it in week one instead of week three is the single biggest timeline decision on a lien file.
Decide the IRS path on day one. If you want to keep your installment agreement, file Form 14134 the day you apply, with the title report, valuation, and proposed closing statement your lender can produce early. If you're going to pay the lien from proceeds, say so, so the payoff is built into the closing figures from the start and the cash-out amount you're quoted is the amount you'll see.
Request the solar UCC-3 in week one. Pull up your solar loan documents, find the lender's contact for lien releases, and ask for a UCC-3 termination or subordination with your property address and the filing number from the title report, then give your processor the confirmation.
Run judgment and HOA payoffs through the settlement statement. A lien that's paid but never released is still a lien on title. The title company can't insure your new lender's first position until that release is recorded, so a paid-but-unreleased lien holds up funding just like an unpaid one. Payoff through closing ties the disbursement to the release and gets both recorded in the right order.
Some of this will be in your control. Some of it won't. The IRS's decision timeline, the solar lender's responsiveness, and the speed of a judgment creditor's release are outside what you or your lender can dictate, and I'd rather name that plainly than quote a closing date I can't back up. What is in your control is the order you do things in.
The Bottom Line
Title decides the timeline on a lien file. A cash-out refinance can close with an IRS lien, a judgment, an HOA lien, or a solar filing on record, and across the files I've watched move through operations at AmeriSave, the ones that close on schedule are the ones where everyone knew about the lien in week one and picked a path for each. Payoff from proceeds is fast and costs cash. IRS subordination preserves cash and costs time, and the IRS makes the call. Judgments and HOA liens run through the settlement statement, and the solar UCC-3 gets requested early because only the solar lender can sign it.
The principle I run my teams on applies to you here. Do the hard things first. On a lien file, the hard thing is the title search and the conversation about what's on it. Every day that conversation happens earlier is a day you get back at the end, and it's the difference between a file that gets across the finish line on the date you were quoted and one that sits waiting on a certificate or a release. If you're carrying a lien and wondering whether a cash-out refinance is still on the table, it often is. Start with title.
IRS, Publication 784, How to Apply for a Certificate of Subordination of Federal Tax Lien: the 6325(d)(1) and 6325(d)(2) routes, the IRS's worked example ($200,000 value, 80% LTV, $145,000 payoff, $4,800 closing costs, $10,200 to the IRS), and the 45-day submission lead time.
IRS, Form 14134, Application for Certificate of Subordination of Federal Tax Lien: the required attachments (title report, closing statement, valuation, proposed loan agreement) and the 46th-day HELOC advance rule.
IRS, Understanding a Federal Tax Lien: how a federal tax lien arises and the difference between subordination and discharge.
Fannie Mae, Selling Guide B3-6-05, Monthly Debt Obligations: installment-agreement treatment when no Notice of Federal Tax Lien is filed, and the full-payoff requirement once one is recorded.
Fannie Mae, Selling Guide B3-6-07, Debts Paid Off At or Prior to Closing: judgments, tax liens, and mechanic's or materialmen's liens must be paid at or prior to closing.
Fannie Mae, Selling Guide B2-3-04, Special Property Eligibility Considerations: solar UCC fixture filings must be subordinated if senior to the mortgage, and leased or power purchase agreement panel value is excluded from appraised value and LTV/CLTV.
New York Department of State, UCC Frequently Asked Questions: UCC-1 and UCC-3 definitions and the UCC-3 termination checkbox.
Nevada Real Estate Division, Fast Reference: Collection of Past Due Obligations and Foreclosure, reproducing NRS 116.3116: the 9-month HOA super-priority period and the 6-month floor.
Colorado Revised Statutes 38-33.3-316(2)(b)(I), Colorado Common Interest Ownership Act, statute text via FindLaw: the 6-month HOA lien priority period.
Mike brings over a decade of mortgage operations experience to AmeriSave, starting in Applied American Politics before transitioning to mortgages in 2008. He holds a Bachelor's in Finance from Florida State University and Google certifications in Digital Sales and Ads. Based in Louisville, KY with his wife and three children, he specializes in operational excellence and making the mortgage process accessible and efficient for everyday borrowers.
Frequently Asked Questions
Yes, and the path depends on whether a Notice of Federal Tax Lien has been recorded in your county. If none has been filed and you're on an approved IRS installment agreement, a conventional lender can count the monthly payment in your debt-to-income ratio under Fannie Mae's Selling Guide B3-6-05 instead of requiring payoff. Once a notice is recorded, the same rule requires the delinquent federal tax debt to be paid in full at or before closing, so the balance comes out of your proceeds unless the IRS grants a certificate of subordination and your lender accepts it. Either way, order title early so you know which situation you're in.
Yes, it's possible, but a recorded Notice of Federal Tax Lien creates the same priority problem for a second lien that it does for a first mortgage. The federal lien sits ahead of any loan recorded after it, and Form 14134's instructions point out that the lien also takes priority over HELOC advances made 46 or more days after the notice was filed, so the IRS tracks draws against it. Lenders set their own credit, income, and equity requirements for home equity products, and a recorded lien is a title issue they'll ask about. Ask how the lender treats a recorded tax lien before you apply, and if you want to keep an installment agreement, ask whether a subordination certificate would satisfy its guidelines.
A judgment lien has to be paid at or before closing. Judgments are on Fannie Mae's Selling Guide B3-6-07 list of delinquent credit that must be paid off before a conventional loan closes, and there's no IRS-style subordination application for an ordinary judgment creditor. The settlement agent gets a payoff figure from the creditor, deducts it from your loan proceeds at closing, and the creditor records a release. Paying the judgment yourself weeks ahead of closing often backfires, because the creditor may cash the check and never record the release, leaving the lien on title. Let the payoff run through the settlement statement so the disbursement and the release travel together.
Yes. An HOA lien for unpaid assessments is cleared for a refinance the same way a judgment is. The settlement agent requests a payoff statement from the association, the balance comes out of your proceeds at closing, and the association releases the lien. In states with HOA super-lien statutes, such as Nevada with its 9-month priority period and Colorado with 6 months under its Common Interest Ownership Act, a portion of the association's lien can sit ahead of a first mortgage, so the title company will confirm that portion is satisfied before the new loan records. If you were once past due but are current now, get a written statement of account from the association before you apply.
No, but a solar loan secured by a UCC-1 fixture filing in the land records has to be handled before your new mortgage can close in first position. A senior UCC fixture filing has to be subordinated under Fannie Mae's Selling Guide B2-3-04, and the solar lender signs a UCC-3 to terminate or subordinate its filing. Only the solar lender can sign it, so request it in the first week of your application. If your panels are leased or under a power purchase agreement, the refinance can still proceed, but the panels' value can't be included in the appraised value or the loan-to-value calculation, which matters if you were counting on them to support a larger cash-out.
The IRS asks you to submit Form 14134 at least 45 days before the transaction date you need the certificate for, and Publication 784 explains that the lead time covers review, determination, notification, and delivery of the documents. That's a minimum for filing, and the IRS doesn't publish a guaranteed turnaround, so I'd plan for more than 45 days and start on the day you apply. The application needs a current title report, a proposed closing statement, a valuation, and the proposed loan agreement, so your lender has to produce those early. Approval is at the IRS's discretion, and under Section 6325(d)(1) it may require a payment equal to its interest in the property.