Selling a home with a judgement lien?

Question

We are in the process of selling our home.We signed a contract with a buyer and in the contract it states that "terms of this offer are void if the buyer cannot obtain clear title" which was fine with us.Today i discover when checking our credit, that there is a judgement filed against us. In my state, this is a lien against property. Now i am happy to pay the judgement out of the proceeds, but does this affect the buyers ability to obtain clear title?I am terrified to call my realtor - i'm tempted to wait and see if the bueyrs title search finds anything. Help!

Just to add some info - this is a home with no mortgages,100% equity, and is being sold to a cash owner.There will be a title company involved but no bank.

Answer 1

Not a problem. Not being able to obtain clear title is not an issue here. The judgment lien will be paid out of the proceeds of sale and the lien will be released. This is a very common thing at closing. Part of the closing process is a title search by either a lawyer or title company, depending upon where you live. Any encumbrances (cloud) on title will be found and cleared up. It is a very rare ocassion when this cannot be done. You need to provide clear title as of the day of closing. From what you are saying, there is enough equity to pay of the judgment. You will be fine.

Answer 2

Inform your realtor immediately. While you won't have a problem at closing, since you are willing to pay the judgment out of sales proceeds, you MAY have a problem finding an authorized person to sign the release of the judgment at or prior to closing. In my state, at least, title companies will not insure or consider titles 'clean' with a judgment unless the party which obtained the judgment signs off an affidavit or document releasing the lien on the property. Life will be much easier and smooth if this little bump in the road is handled ahead of time and prepared for.

Answer 3

I agree with greeneyedblond - don't pay it off ahead of time. If you do not have the original release of lien by the time of closing, you will not be able to close until the original release is obtained ( I would have thought the number one title company, First American, would not have suggested that). Have them pay it at closing. The title company will contact the lien holder and get payoff instructions, deduct it from your proceeds and pay it directly to the lien holder. Just make sure the lien isn't for more than you are getting for the sale, or you may be bringing money to closing. Good Luck.

Answer 4

I would not suggesting paying it now...
It will take too long for you to obtain a lien release and it may not be cleared at closing. This will cause the title co to have to double pay or hold money.

It better to just contact the title co, give them the info as soon as possible. The sooner you contact them the quicker they can order the payoff. Depending on the state and type of lien, payoffs can take up to 14 days.

If it comes up at the last minute, the closing could be delayed because the payoff had not been received.

Answer 5

The lien will be paid at closing. The lawyer doing the title search will find it and make sure it gets paid. There shouldn't be any problem with the buyer having a clean title.

Answer 6

The buyers title work will find every little thing attached to the property. It would be best to become upfront with this to the realtor. The lean may not prevent the loan from proceeding. They may be able to have that as an attachment to the closing cost. If not you may wish to find a bank or a close family member to help you out with it until closing.

Good Luck

Answer 7

No I work for the number one title company first american and you have two options you can have it paid out of your proceeds or you can go ahead and pay it now. The title company when they prepare their commitment they will pick up the JL.