Normally the title company is primarily responsible for verification of "free and clear title". Your lender should have had a eyeball on this issue as well.
If it is truly a "foreclosure" the owner probably will not assist in paying the debt off (lien). When the bank who has a primary interest in the property, it is suppose to satisfy all the liens and sell it with "free and clear title."
Some properties (home, townhomes, condos) have in the Covenants, Conditions, and Restrictions (CCRs) a paragraph that states that any lien placed by the HOA will be a superior lien, to any mortgage lien placed on the property after the date of the Covenants, Conditions, and Restrictions (CCRs)
At this point the bank/seller might consider paying the HOA dues in question if it was not disclosed prior to sale that there was a lien that need to be satisfied on the home..
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Obviously there was some kind of lack of communication...
You should not have been in the attorney's office getting ready to sign closing paperwork if they had not received a "clear to close". The title company would not have issued a HUD1 if there was a lien to be paid prior to closing. This all would have to be settled before you could even think about closing.
You may need to consult a different attorney to see if you can recieve any recovery.
Charles Rutenberg Realty
We do back to back mail aways and the normal closing all the time, they all have risk today as compared to yesturday; but it simple work if you know what the heck your doing. That's why it's important to chose the right realtor with experiance and tenacity to guide you and get the job done done! I am sorry for your trouble and sincerely wish you the best!
The issues that should have been cleared were to be cleared 1 day before closing (at least). The lender should have been informed that there were past due payments and had them cleared before-hand.
WATERWAY REALTY, REALTORSÂ®
If the new home is a REO, the remedy and options as to what happens if the seller cannot deliver clear title is included in the bank addendum you signed to purchase the property. Keep in mind it may not be anyone's fault. The lien may have been recently filed.
Is this a HUD foreclosure by any chance? If so, this happens a lot because there are more people involved in managing that property.
If I were you I would first talk to your agent about how much longer you can extend your contract. Next I would find out when the bank is going to get the HOA fees taken care of. It was the bank's responsibility to take care of those fees and your lender's responsibility to mitigate that situation from the beginning. There is a good chance they will point the finger at each other but they need to work together now to address this issue quickly.
Let us know what kind of feedback you get. Good luck.