Reducing or removing liens

5 Replies

I'm buying my first bankruptcy/foreclosure in Portland OR PDX and it has a # of liens on it. Specifically, an $89K fire department lien.  

Has anyone had any success getting liens reduced or removed?  The bankruptcy trustee is going to try to negotiate with the city starting at 50% and has asked the real estate agent to work with the city. She's left some messages but has had no response.  I'd like to jump in and see what I can do.

Any suggestions or past experience?  Thank you! 

@Kelly Maestri Do not get involved in that process.  It is the selling banks responsibility to clear the liens, not the buyers responsibility.  Getting involved in the process can only open you up to liability.  

it is a bankruptcy and the trustee asked the agent to negotiate with the city.  The bank is not involved. The agent isn't getting phone calls returned from the city and isn't as motivated as I am to make it happen. 

Update! I learned some new information.  

I took Neal Collin's advice and went to this amazing website PortlandMaps which allowed me to find a human at the city who explained the lien process and options. Here's what I learned:

  1. The city can take a 2nd position regarding liens for a period of time so sale can go through.
  2. I would talk to person X at the city who has authority to lower or remove liens and get a commitment for what that would be.
  3. If I do $500+ in repairs, then I can get a renovation waiver for 6 months so the property doesn't generate any more fines.
  4. Violations exist beyond the liens and I'll need that list of violations to walk through with the inspector/contractor to ensure I take care of those in the remodel.

So, this is what I've learned so far and will keep everyone posted!

Update! I spoke to the contact in Portland who has the authority to reduce/remove liens and learned the following (see below). If anyone knows of any threads on this topic of lien abatement or has experience - please chime in.

  • I have to take out permits BEFORE I buy the property to fix the problems that caused the liens. This will require me getting plans drafted and permits pulled - the owner and/or bankruptcy trustee will have to sign the permits.
  • Getting these permits allows me to ask for a lien waiver which stops time so the liens stop accruing fines and interest.  I'll have to complete the repairs in a defined # of days in order to comply with the waiver.
  • Once I have these permits and waivers, I can negotiate with the city to see  how much they'll reduce the amount of the liens.
  • Certain types of liens or fines cannot be reduced. For example, liens or fines with a hard cost associated with them such as an officer appearing in court and the owner did not appear or if the city sent a team to clean up a nuisance (yard, etc.). But those are small cost liens (low hundreds to a couple thousand max) compared to the high cost liens (e.g. one lien is $89K for fire damage).  
  • The challenges I face are:
    • Can I get sufficient and timely access to the property so the contractor and his team can do the due dilligence?
    • Can the contractor and his team create the plans to get the permits to beat the sales contract deadline?
    • Will the owner/trustee cooperate to sign the permits?  
    • And will the city ultimately agree to reduce/remove liens to make this property?

And all of the above is compiled with the effort of doing this using an FH Renovation Loan. Fun times!

I'm now in the process of speaking with a contractor to learn more about the process from his side (compiling the data to create the plans to submit for permits), so will have an update soon!