Has anyone had a similar experience with a lien on a hud home?

Has anyone had a similar experience with a lien on a hud home?

Investor · Easley, SC · Member since 2013 · 248 posts · 51 votes

I'm curious as to whether anyone has experienced anything similar to this. My bid on a hud house was approved. In the contract I have 15 days to have an inspection completed. My realtor asked me to have the power turned on for the inspection. I called the utility company and they agreed to do so. However, several hours later the utility company called me back saying there was a note on the hud property account saying they could not turn on the utilities until a complaint was fixed. They gave me a phone number to call. It was to the city. There I was told that the city had to come out several times in 2015 ( 2 years ago) to mow the lawn several times and that there was a lien of over $1000 on the account that had to be paid before they would turn on the utilities for an inspection. She actually rudely demanded that I pay it right then over the phone.

I called my mortgage lender and was told that they won't have title inspection back for another week. That will be past the 15 day inspection window (but I will still have one done no matter what). He recommended that I have my buyers agent talk to the listing agent and have them either pay the lien or have the utilities turned on. The listing agent ended up calling the city and asking them to send an invoice to hud, and the listing agent is supposed to let me know next week if hud agrees or denies to pay. I have never had this happen before. Has anyone else experienced anything like this with hud?

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  • Greg H.Pro Member
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    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    It will be sent to the Compliance Dept with the Asset Manager. The initial response they will argue is that the lien should have been removed by the foreclosure. The utility company will disagree. My guess is it is less than 50-50 that HUD will it. The listing agent will never get it taken care of and turn on the utilities as the do not have the authority to do so

    If you really want the property, I would put on my happy face and try to negotiate it down and be prepared to pay for it after closing. Explain the situation and you might get a reduction. Stomping your feet and demanding HUD pay because its their responsibility(even though it is) just wont get anything accomplished.

  • Investor · Easley, SC · Member since 2013 · 248 posts · 51 votes
    9y

    @Greg H., thanks for the comment. I'm definitely not willing to lose the house even if it means I end up having to pay, I'd do it. I just don't think that I should have to and haven't come across this situation before.

  • Investor · Mount Dora, FL · Member since 2015 · 92 posts · 44 votes
    9y

    We have had a HUD home which had a lien that we found on title search (prior owner had not paid their roofing contractor, who placed a mechanic's lien). It went through the compliance department, etc, and HUD paid the lien, we went on to close without issues. It delayed closing by one month but we weren't in a hurry and our lender played along as well...

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    @Sebby Gabre Madhin

    Great to see it worked out for you ! However, a mechanics lien is different in that is was a cloud on the tile.  The city "lien' which more than likely is just a hold would not.  They have the hammer in that they will just not turn on the utilities without it being paid because basically they can

  • Investor · Easley, SC · Member since 2013 · 248 posts · 51 votes
    9y

    Thanks for all of the great responses and information to my question. I thought I would give an update on the situation. The project manager for HUD said that HUD will take care of the lien issue. After they pay it, we will have the inspection completed.

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