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i was in the process of buying a house.Everything was going fine,made an offer,had the house inspected,ordered the seller for some repair works BUT almost near the closing date discovered that the property has a mortgage lien still in place.So it has a cloud in the title.Is it worth buying this house? My real estate agent and the attorney keep on saying that it is normal to see this kind of scenario.It would be technically ok to move ahead with the deal because we have to buy a a title insurance which will cover any liens from previous transactions.They even went on to tell us that if we backed off this deal,we have to pay the attorney's fee,the title fee,the due deligience money has to be forfieted and even pay the appraisal fee.Is this true?I thought we had to pay them when the property was closed.We want to back because of the lien which we were not aware of in the beginning.How will a lien on a property affect when we want to sell the property?
Is the lien associated with the current owner, or a previous owner? Has your attorney attempted to contact the lienholder to get a release? There must more to this...
Hmm. Sounds like you better talk to a real estate lawyer that has no skin in this game.
If it is known before you close there is an existing lien on the property, I don't see how you can get a clear title as the lien holder will have first claim on it. And since it is known before closing, I'm doubtful that title insurance will cover it.
I would not close until this is cleared up. Someone was not upfront about what is being sold.
Let me preface by saying IANAL. Yes it's true. If you back out of the deal, even for legitimate reasons, you will still have to pay any costs incurred during the due diligence process (ie title charges and lender charges). What likely happened (since you provide so little information) is that a prior mortgage was paid off, but the release was never (or incorrectly) recorded. If the title company is willing to insure over the lien, then I agree with your lawyer and agent. That being said, it would be worth some time and effort to contact the prior lender to clear up title.
I find it hard to believe the agent and attorney are simply saying not to worry about it unless its from the Catawba Indians. I'm assuming it's some sort of old lien that the current owner can't settle themselves and thus "quiet" the title. If this is indeed the case there are procedures the seller can undertake to quiet the title. Assuming there is contact way to directly contact the lienhoder the seller might have to advertise the settlement of the lien (see Mecklenburg Times) in order to get it cleared. Regardless of how its handle make absolutely sure your title insurance addresses this lien.
if you back out unfortunately you are going to be out all of the money you mentioned. Its paid at closing but only if you close. If you don't close then its on you. My best advice is to work with the seller to get it resolved. They should work with you afterall its really their problem that they will have to resolve one way or the other.
i was in the process of buying a house.Everything was going fine,made an offer,had the house inspected,ordered the seller for some repair works BUT almost near the closing date discovered that the property has a mortgage lien still in place.So it has a cloud in the title.Is it worth buying this house? My real estate agent and the attorney keep on saying that it is normal to see this kind of scenario.It would be technically ok to move ahead with the deal because we have to buy a a title insurance which will cover any liens from previous transactions.They even went on to tell us that if we backed off this deal,we have to pay the attorney's fee,the title fee,the due deligience money has to be forfieted and even pay the appraisal fee.Is this true?I thought we had to pay them when the property was closed.We want to back because of the lien which we were not aware of in the beginning.How will a lien on a property affect when we want to sell the property?
I wouldn't walk away just yet because you never know what the situation might be. When I bought my first house in 1999, I took out a mortgage for half if the value. The other half was my down payment, plus a loan from my father. I sold that house in 2002. The house has been resold a couple times since then, but last year, it was up for sale again and my father was contacted with questions about whether he still had a lien on the house. The sale was being held up until he responded to them. At this point, he didn't even know what they were talking about, it had been so long. It was surprising to me that such a question would come up more than 12 years after I sold that house, and when there had been a couple other sales since then. Of course my father had no lien, and the current owner, who bought it from the person who bought it from the person I sold it to, had no way of knowing what had transpired way back in 1999. So there is not necessarily anything fishy going on with regard to the current owner of this house you're interested in. They may be a completely innocent party, just trying to make sure all the t's are crossed and i's are dotted.
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