what rules are there reguarding who pays liens against a short sale property that showed up .should the buyer or the bank be liable?

Asked by Bigjohn4719, 32259 Tue Apr 26, 2011

the property in question is a six unit apt. bldg that i have a signed sales agreement with the seller that states all liens to be settled before closing.the bank accepted a settlement offer that did not include the liens as they did not show up until the title search.now the realtor says to close the deal i may be stuck paying off the liens.I do not have any signed agreements from the bank just the realtors verbal.this is a cash deal in pa.

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Nancy Massen…, Agent, Ponte Vedra Beach, FL
Tue Apr 26, 2011
Unfortunately there are no "rules", however, it has always been my experience that the bank negotiates all of the outstanding liens prior to the contract settlement. They should be responsible for providing you with a clear title at the closing. In some instances the buyers I have worked with have been asked to contribute some funds in the case of a third position lien....and yes, believe it or not there are some third positon liens out there. Do you have a written Purchase and Sales Agreement? Who wrote it?

Are you represented by a "buyers' broker"? If so, they are not doing their job. If you went direct to the listing agent, although I am sure that they want to get the transaction done, they are representing the seller/bank and owe you nothing as far a negotiating on your behalf or making sure that all of the outstanding debts are the responsibility of the lender or previous owner.

It sounds like you need some representation. If you don't have a Realtor at this point, you may want to contact a real estate attorney in that area for assistance. It would be too late at this point to bring another Realtor into the deal.
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Eli Givoni-S…, , Boca Raton, FL
Tue Apr 26, 2011
There are no rules in short sales. If you want clear title, somebody has to pay those liens. It is possible to go back to the bank, but that can take a long time. If the first approval letter expires, and you don't get a second one, the whole transaction can fall through. Are these big liens, or is it just the principle of the matter for you? As the buyer, you should stand back, take a look at the big picture and bottom line, and decide if, even with paying the outstanding liens, the bottom line is a still a fair price that you are willing to pay for the property. If so, you should just close, be thrilled you got a good deal, and move on with things. Most short sale sellers are not in a position to pay any outstanding liens. That is why they are in this position, in the first place.

We are a professional short sale service and would be happy to explain the process to you. Please call us directly to discuss your specific situation. We look forward to hearing from you.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states

MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
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Brian Flock, Agent, Carlsbad, CA
Tue Apr 26, 2011
It sounds like you are being played a bit by a lazy agent.

The buyer never has an obligation to pay the seller's debt.

Everything is negotiable. You just may have to wait for the listing agent to renegotiate the debts with the bank.
Web Reference:  http://wwe.FlockGroup.com
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Alma Kee, Agent, Tampa, FL
Tue Apr 26, 2011
Is there a middleman investor that got a lower short sale price and is immediately flipping it to you? If so, this may be a way to increase that investor's profit.

You see these shady potentially fraudulent short sale transactions target "all cash" buyers so that's why I'm asking.

If this is a clean deal and you're buying it from the owner of record then yes there is a possibility the lender that is taking the loss on the sale may require you to pay certain liens. You have to decide if it's still a good deal because technically you didn't agree to this on your contract.

Good luck!

All the best,
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James Gordon…, Agent, Hamilton, OH
Tue Apr 26, 2011
Big John all liens need to be cleared to be able to trasfer the deed. The seller or their agent has the duty to clear the liens either by negotiation or paying them off before or at closing.
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