I asked a question about searching a property title in the Yahoo community recently. In one answer, there was a reference to a mechanics lien being an example of an encumbrance. I read somewhere that unpaid subcontractors could seek this remedy, but who would foreclose on the property in this case? If I want to make an offer on a property with such a lien, how can I help the seller settle the claim first?
2007-06-15 05:48:25 · 4 answers · asked by LucyJ 1 in Business & Finance ➔ Renting & Real Estate
You are correct in your assessment of what a mechanic's lien is. That lien holds the same weight as does a lender's lien on the property, and the mechanic involved can force a foreclosure on the property to be paid if the seller cannot pay, or refuses to pay. If you make any offers on such properties, you must be sure that any amount owed to the mechanic is paid before or at closing, in order to have the lien effectively satisfied and removed. If the seller cannot pay before closing, it can be done at closing, with all the proper paperwork in hand, and the mechanic present.
2007-06-15 06:12:05 · answer #1 · answered by acermill 7 · 0⤊ 0⤋
I think Acermill has already given the best answer possible that covers both your concerns.
Note that some Title Insurance companies will require the lien to be affirmatively removed before issuing their policy to the buyer.
Just make sure you don't get into this situation in the future if you are thinking of alterations to the property. Otherwise you could end up paying twice, once to the contractor who failed to pay the subcontractor, and again when you wanted to sell your property! You need a control system to make sure everyone involved in the alteration work contract gets paid. You could pay the subcontractors and suppliers merchants yourself. Don't pay any contractor's employees though ( he must meet other obligations). You could ask the contractor to get lien waivers from all he is responsible for paying.
2007-06-15 07:54:16 · answer #2 · answered by Anonymous · 0⤊ 0⤋
These are filed by contractors who have not been paid for their work. When the place is sold, they can step in and take what is owed to them from the purchase price you paid to the former owner. It is his sole responsibility to settle this debt. It is best to make sure the debt is paid off and the lien settled before you turn over your money for the property.
2007-06-15 06:11:34 · answer #3 · answered by hillbilly 7 · 0⤊ 0⤋
They couldn't foreclose. The debt will have to be satisfied before the property deed can be transferred by sale or otherwise.
2007-06-15 05:53:10 · answer #4 · answered by Ronin 4 · 1⤊ 0⤋