Question regarding outstanding tax and condo liens

5 Replies

All, 

Have a property to purchase, however, it has a tax lien and condo HOA lien at the moment.

Is it possible to write up a PS stipulating these expenses will be paid at closing or do these need to be settled first before? 

Just trying to see if I can add those fees in to the PS as part of the purchase so I can finance the cost. 

I'm thinking the condo lien I can't since I will need the 6D to close anyways but taxes might be doable. 

Not sure if this is a state specific issue or not. Here in Colorado, you could definitely stipulate payment at closing, however you may have to bring that amount to closing. Not sure a lender will allow you to roll those into the mortgage unless there's enough equity to allow for it.

Here in CO there are plenty of times where a condo/HOA lien gets paid at closing. It's usually on the seller's side though. Have yet to see it specifically rolled into the loan by the buyer. Anything is possible though. If you were going to pay it out of your pocket anyways you could get the seller to agree to pay and just bump the price to offset their cost if that's your plan.

Almost all contracts have language similar to "Property to be sold free and clear of all liens and encumbrances" This means it is the sellers responsibility to pay theses liens off before transferring to you. Normally a title or escrow company will handle the settlement and pay all the bills out of the sellers proceeds.

I think @Linda Weygant must have misread your post (or I did) You don't have to bring the money and it is not added to the mortgage. The seller pays these bills. 

Now there are certainly situations where the price may be below what the seller owes on the property. You can negotiate a deal, so that you pay off bills associated with the property, but that is not the norm.

Thanks everyone for the inputs! 

@Ned Carey Unfortunately, the seller does not have the funds to have these liens released. I might have to find a creative way to pay those liens for them but in exchange, they agree to sell the property to me for X price. 

Not sure what is the best way of doing this. 

@Jochy Perez is the price you are paying more than the taxes, HOA /condo lien and any mortgage due? If it is then those liens simply get paid at settlement. If the owner owes $15,000 in taxes and HOA fees her (or she) gets $15,000 less at the settlement.

Those bills do not have to be paid before settlement. The exception is if the county or HOA has already started court action. Then you need to get the deal completed before any action becomes final.