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Updated over 3 years ago on . Most recent reply presented by

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Rumen Mladenov
  • Investor
  • Newark, DE
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Old lien... How to proceed?

Rumen Mladenov
  • Investor
  • Newark, DE
Posted

Hi BP community!

I have a property under contract that has a lien from 1976 that has not been recorded as satisfied. House was sold in 1978 and then again in 1985, and I am purchasing it from the heir of the person who bought it in 1985. 

The seller can't find any of the documents from the 1985 purchase, and the lender on the 1976 loan is no longer in business - it was acquired by a different bank which was subsequently acquired by a third bank. Purchase is now on hold because of this, and it looks like my two options would be to walk away or take the risk and purchase it with this lien as exception on the title insurance. Has anyone faced this before? How did you proceed?

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Tom Gimer
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Tom Gimer
  • DMV
Replied

The answer depends upon where the property is located. 

Every bank has a successor... one method is to determine who can release the security interest. Is there a trustee named in the instrument?  The bank may not have records but the trustee can release it. Does the seller have an owners policy? If so there may be an inter-underwriter indemnification agreement that resolves this unreleased item quite quickly. Otherwise the current title insurer could obtain a letter of indemnity from the seller's title insurer.

Lots of ways to resolve this other than agreeing to an exception.

  • Tom Gimer
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Gimer Law

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