Hello Ronda,
That is a terrible situation to be in at the ninth hour. Although, the closing cannot take place unless the lien is paid off or it is determined that the person named in the lien is not the same as the property owner. Have they in fact confirmed it's the same person, would be my question? Especially since the Seller is stating he is unaware of the Lein.
I hope all works out for the Best.....
Shelia Marshall / Mortgage Planner
Transcontinental Lending Group

I'm not an attorney but the answer should be very clear in the contract. If you are using a Realtor or Attorney this should be easy. The contract is usually very clear on the closing procedures and includes a clause about clearing a title before closing. Usually there's a period to time to clear title when something like this comes up and it's not much different than when a buyer can't close because of Mortgage Company finding problems with buyer's credit and something has to be cleared up. Happens all the time. The title company should be able to verify the information, if the seller is telling the truth, and maybe delay the closing a few days or even weeks. If it can't be cleared then find another house if the seller can't correct or is unwilling to coooperate in clearing the cloud on title. It doesn't matter whether you are paying cash of getting a loan the problem remains the same. Every house is an investment whether you are living in it or buying it to rent.

Hope that helps you put a different perspective on the situation.

Don't let emotionals determine the outcome. Take a deep breath and remember that 80% of what you worry about never happens, so I've been told.

Good Luck

Real estate attorney first, last and always when title flaws are found. Given the details you provides, you might want to contact your real estate professional and look for a backup property since you have gone through most of the work getting your financing. If the seller keeps his position and title cannot be cleared then RUN and do not walk away from this transaction. The attorney can advise you if there is anyone's liability in this transaction and what action you might take. Good fortune Lou

Hi, Ronda

You say "they" did another search... are you saying that a Title Company or Title Attorney is doing the search?

You also say the "Seller won't pay".

If you are getting a Mortgage Loan from a Bank or Lender to buy this house, they are [probably] going to require Title Insurance. Since that Title Insurance cannot be issued until that Loan is paid off, there will be "No Closing".

If you are paying Cash for this property, you will not have Clear Title. At best, you can get Title Insurance with the 40K "excepted". But that $40,000 will stick to the house, and at some point they will probably seek a Judgment, or file Foreclosure proceedings to get their money.

If you do not a Title Attorney or Real Estate Broker involved, or even if you do,
then please
See a Real Estate Attorney.


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Best wishes to you,
Fred
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Agents are not allowed to give opinion on title,if you dont have a R.E attorney i advise you to get one..