If there is a lein on someones properties can they be put up for sale?

Asked by Terri Smith, Laingsburg, MI Thu Sep 6, 2012

My daughter has been trying to buy a house for about six months.It's a HUD house and she's had all kinds of hurdles.She got everything delt with,was about to get a closing date(within days) and now they say there is a tax lein for $40,000.00.No one seems to know if it's against all of HUDS properties,the previous owners or what.Shouldn't that have been cleared up before the property was put on the market?

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Haig Istambo…, Agent, Rochester, MI
Fri Sep 7, 2012
Hello Terri,

Your story sounds like a HUD deal that I have currently for a young couple for a HUD home in Warren. Months of hurdles and we have set 3 closing dates only to cancel each one. I am not going to repeat what Alan said in his reply but I am going to expand on what he said for HUD deals in Michigan.

In July of this year the State of Michigan decided to put liens on a lot of HUD owned properties in certain counties, but not all counties. What the issue is, is this; when HUD took ownership of these properties they never changed the ownership to reflect that the properties were supposed to be switched from Homestead to Non Homestead. When a property is Non Homesteaded, the county and the State collect more taxes on that property. So the State of Michigan feels they are owed more money itaxes and to force the issue, they placed blanket liens on a lot of properties.

If you are paying Cash, you can still close on the property but will only be able to do so with an exception on your Title Insurance, basically meaning that you will be liable for the lien if HUD and the State of Michigan don't resolve the issue. Supposedly they are working on a resolution. Hundreds, if not thousand of properties are affected.

Contact a Title Company to do a search if you are curious and you will see what the lien is, it is easy to do. If you are purchasing the property using financing, you will not be able to close on the property until it is resolved because the lender will not insure the policy.

I hope this doesn't confuse you. Feel free to email me with questions.

Thank you,

Elias Realty
(248) 379-6547
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Thank you so much for this information.Still not quite sure I understand but I appreciate your reply.I'm forwarding this to my daughter,thanks again!Terri
Flag Fri Sep 7, 2012
Alan May, Agent, Evanston, IL
Fri Sep 7, 2012
A property can be put up for sale with an existing lien on it. But the lien must be satisfied (ie: paid) before or at the closing. While it would be better to clear up a lien prior to listing, it's not always possible. Sometimes the only way people have to pay off the lien is from the proceeds of the sale.

If you're using an attorney, or closing through a title company... either of them should be able to do a simple title search, for you, to determine if there is a lien, and if so, for what amount.

Good luck.
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