What will happen if the property we are buying is in lien?

Asked by Matsay, Merced, CA Mon Aug 1, 2011

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Karolyn Do, Agent, Merced, CA
Mon Aug 1, 2011
Assuming you are referring to single house residential in your question. Are you buying the property from a bank owned/REO, a short sale seller, or a court steps auction? Bank owned, short sale, or regular sales have to have clean title to transfer to a new buyer meaning if there were liens, they will need to be paid before escrow is closed. Title/escrow will check for any liens on the property. If you buy and an auction, you have to know what you are doing and do your homework, check the records because it may still have liens on it, then you would be responsible for the unpaid liens.
Karolyn Do
0 votes
Dp2, , Virginia
Mon Aug 1, 2011
Please don't mistake any of my comments as any form of legal advice--it's not.

Technically, properties can be--and often are--sold without having satisfied the various liens in all 50 states. Each state approved contract (or an addendum/rider in some cases [as in OH and a few other Midwestern states]) that contains a clause about the buyer buying the property subject to various pre-existing liens. The CA state approved contract contains that clause.

Having stated all of that, what would happen will depend upon several factors (including the actual lien[s], the current market value of the property, etc).
0 votes
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Mon Aug 1, 2011

If the property you're trying to buy has an IRS lien against it, there are companies that can help the seller get it removed. My wife and I bought a short sale home last year and just before we were due to close the IRS caught up with the sellers and put a lien on the title of the home. It stopped the sale of the home in its tracks.

Bob Crane at Ameritax.com was who helped us. It took several weeks but he worked with the sellers and title was able to be perfected so that we could close. If you have any questions about something like this, let me know.

Rob Spinosa
Web Reference:  http://www.ameritax.com
0 votes
John Arendsen, Agent, Leucadia, CA
Mon Aug 1, 2011
A lien is alien is a lien. Be it a 1st, 2nd, tax or mechanics lien it all must go away before title is transferred.
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Ron Thomas, Agent, Fresno, CA
Mon Aug 1, 2011
Almost all property has a Lien on it in the form of a Mortgage.
If you are referring to a Lien placed by a Contractor, for example, the Lien would have to be satisfied before the Property could clear Escrow.
When there is a Lien, it is referred to as a Clouded Title.
The Seller is responsible and that is the reason for the Title Insurance.
For more details, you can talk to your Title Company.
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Anna M Brocco, Agent, Williston Park, NY
Mon Aug 1, 2011
In order to be able to close and be given a clean title, the lien needs to be satisfied...
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