Purchasing Property With a Lien

4 Replies

Hey BP community!

Have a couple of questions I hope someone can help me out with. I have a property under contract and received a call from the seller stating that there was a lien placed on the property by a relative that loaned them the money to purchase the property initially. They have been in contact with the relative who is willing to sign a release so that we can close on the property without any issues. I may wholesale this deal and don’t want any issues for my buyer. So my questions are:

1. Is there a form that releases the lien holder from title so that we can close?

2. If not, can we still close and proceeds from the sale go to the relative (lien holder) with whatever’s left over going to the seller?

Any insight would be greatly appreciated! Thanks

Every state is different so you would have to check your states recording laws. Typically if you want a lien released you would have the lienholders sign and notarize a form stating that they are releasing the lien and you would then record the release at your local county recording office. 

Using settlement proceeds to pay off a lien is a common occurrence. A title company would have no problem doing that. 

You can't pay off a released lie from escrow.  If it's released , it no longer exists.  I also think you would be hard pressed to find someone willing to take an assignment ins property that has a cloud on title.  Lastly, of im the relative that is owned money, I'm leaving my lien right where it is.

Thanks @Charlie Fitzgerald .  The lienholder is a parent who will be paid back once the house sells.  They have already agreed to sign a release if needed as they don't want to hold up closing.  I've never dealt with this before so just want things to go as smooth as possible.  

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