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We purchased a property the end of December, 2008. It is city lots with a rehab house.
OK so we closed and we paid it off so I have paperwork here with title insurance and a warranty deed.
Now it is less than 7 months later and I put the property up for sale, have a buyer and it is/was set to close on Tuesday. The title search was to be run Friday and paperwork sent to me Monday to sign and return.
Ok so I get a call from the buyer who's already placed his down and closing costs with the title company and he asks me if I've taken care of the almost 4,000 dollars in liens the city has on the property.. I found it on the answering machine this afternoon when I came in so I haven't talked to him but at this point I'd prefer figure out what's going on first.
My reaction is this...
WHAT??!
I don't understand if there are liens WHY the previous owner or title company didn't tell me and how did I get a deed?? We are going through the same title company that was used when I purchased the property.
I don't understand any of it.
So in the morning I will be on the phone with the title company and the city but is this normal? I mean what is title insurance for if not for this to not happen? I don't know what to do if there are liens in that amount on the property.
Last edited by misplaced1; 07-19-2009 at 04:22 PM..
Reason: typo's
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,313,597 times
Reputation: 6471
If those liens were in fact filed against the property before you closed, you have a claim against the title company. If they were filed after your date of closing, they may have been in process by the city. You may be able to have the city rescind their lien (I doubt it, but it might be worth a try).
You should have received a preliminary title report from the title company, which is likely where the buyer is getting his information. The dates of the liens will be on it.
I have a message in to the title company but she hasn't called me back.
I did call the city and obtained dates of notices and invoices on the liens.
We closed Dec. 29th of 08.
One item was a warning letter sent on June 24 of 08 and invoiced on July 16 of 08.
The other item was a warning letter on December 3 08 before we closed but work not invoiced until Feb 18 after we closed.
Seller never told me ANYTHING about any warning letters or invoices. I never had a chance to remedy the situation because I didn't know about any of it. Title company did not catch the one lien. I've never had a letter on anything regarding the property from the city. The buyer actually heard from a neighbor there were liens and that's when we started checking this out.
I don't know what to do and I have a headache. To top it all off, I'm 1600 miles away from the property right now.
Location: Sometimes Maryland, sometimes NoVA. Depends on the day of the week
1,501 posts, read 11,753,766 times
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I don't know if this will help or not. When I bought my first house, there was a $10k lien on it. I remember it distincly b/c it messed up my HUD-1 and the title company didn't get me the correct one until about 90 minutes before closing. The title company took the $10k from the seller to satisfy the lein so that I could take clean title. 6 years later, I go to sell. The title company calls me up about the $10k lien. It took one phone call to my previous title company to take care of it.
But one thing that confused me... I don't know if it matters, but from the first post it sounds like you bought from the city?
Quote:
It is city lots with a rehab house
If it belonged to the city, wouldn't you purchasing it clean the liens?
I'm not an agent, so maybe I'm wrong about this, but I thought this type of situtation was EXACTLY the reason one uses a title company and purchases title insurance.
My understanding is that by paying for title insurance through a title company, you are paying them to ensure that they have passed clean title. If it is discovered that they have not (if liens get filed or are discovered after the fact), the title company agrees to deal with them.
When the liens were filed shouldn't matter.
One other thing to talk to the title company about is whether they will give you a break on the title insurance for this sale, since it has only been 7 months. Around my area, many title companies have a time frame, that if you sell the property within that time frame, and use the same title company, they will cut you a break, since they have already done all the title work. However, in the light of this new development, they may refuse anyway.
The property consists of 4 lots in the city with a rehab house.
This is the same title company I went through when we purchased the property. Title search was done Friday but no word from them yet, I called the city today or I would know nothing still.
These liens should IMHO be the responsibility of the previous owner. The notices all went to him. He sold and signed knowing there was one lien and knowing the city had already given him a warning on another issue weeks before we closed and he did nothing and said nothing.
I verified there are two liens that add up to almost 1000 dollars. I can't afford to pay the liens out of pocket and my buyer was going to be paying payments so there isn't a cash pay out to take it out of.
I'm still waiting for that call from the title company and it feels like it's going to be a long day.
Well the title company is taking care of the one lien that was placed last summer but the other that was started as a warning letter before we closed and lien placed after closing, they don't. I feel sure if the title company had found the lien before we closed (when I purchased) this whole mess would have been avoided because it is likely we would have found out a letter of warning on the other issue had been sent the previous owner. Instead they (owners) were allowed to pretend all was good and I have to deal with a hassle and over 700 dollar bill still remaining.
It's possible one lien was unrecorded at the time of your closing. If that was the case, the title company would have no way of knowing of it and the title policy would not have covered it.
In any event, this is one reason that an O&E is usually done prior to listing a property. Any title issues can be addressed prior to a property going under contract, etc.
In our area, an O&E is standard at the time of listing. Then after a contract is accepted, a title committment is issued to allow for title review. Any title issues that may have come up are addressed at this time to avoid any delay in closing.
I have an offer on a short-sale home at this time. On the disclosure statement there is no mention of liens. I'm a digger and can find information on just about anything (I find lost people and pets, really, I do) I went to the county website and found that there IS a lien on the property from the HOA filed in April '09. I made sure to email my realtor and told her to ask the listing agent how the owners are going to take care of this - as well as wondering how they could even get an okay for a short sale since all I've read about says if there's a lien a short sale couldn't be done, but maybe it depends on the bank???
I'm definitely getting title insurance if our offer is accepted, which it probably won't be, which is a WHOLE other story in itself. I'll be getting an appraisal, a survey, etc. etc - anything to cover my rear.
Well the title company is taking care of the one lien that was placed last summer but the other that was started as a warning letter before we closed and lien placed after closing, they don't. I feel sure if the title company had found the lien before we closed (when I purchased) this whole mess would have been avoided because it is likely we would have found out a letter of warning on the other issue had been sent the previous owner. Instead they (owners) were allowed to pretend all was good and I have to deal with a hassle and over 700 dollar bill still remaining.
I don't know what I was thinking in my first post. If you just have basic title insurance, then yes, timing matters. Expanded or extended title insurance ( I can never remember which, one covers liens placed after closing, and I think the other includes an onsite examination to make sure there are no encroachment issues, etc., sort of a mini-survey) would have protected you in this case, but would have cost extra at closing. New construction, you want to get it for sure, because 90 days worth of unpaid bills means paying for a large portion of your house, or even all of it, a second time.
I'm just wondering, have you tried talking to the seller about this, or to the liening party? I can just imagine a scenario. You said it wasn't even invoiced until February. So the bill probably went to your address and got forwarded. The previous owner could conceivably have thought "Oh, that got paid off in the closing", and tossed it out. I can see it happening. From what I've read, in some states, contractors lien the property when sending bills, and then release the lien upon getting paid. So, in this case, if they never got paid, it never got released. Its even possible that it DID get paid, and the liening party forgot to file the release.
If it really is an unpaid bill, and it wasn't placed until after you owned the house, I would fight it with the liening party. They can't ethically lien a property you own for work done before you owned it without notifying you first. (I know, I know, legally they can do this, but I find it unethical). Does the person who sold you the house own any other property in the area? If you can give the liening party an address the previous owner currently owns, they might be willing to attach the lien to that property instead and let you off the hook.
Quote:
Originally Posted by MMichelle
In any event, this is one reason that an O&E is usually done prior to listing a property. Any title issues can be addressed prior to a property going under contract, etc.
In our area, an O&E is standard at the time of listing. Then after a contract is accepted, a title committment is issued to allow for title review. Any title issues that may have come up are addressed at this time to avoid any delay in closing.
Ok, I have to ask, what is O&E?? I know E&O is Errors and Omissions, but I've never heard of O&E. At the time of listing, we get a "Listing Report" from the title company, maybe its the same thing?
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