Wholesaling: Who is responsible for paying liens/fines/judgements, the buyer or the seller?

4 Replies

When wholesaling a house, who is responsible for paying the liens on the property? I am in talks with a seller who wants $9,000 for his house, but says he owes around $3,000 in fines. Is the seller responsible for paying the fines before I can put it under contract, or is it my end-buyer's responsibility to pay the fines off?

And how does this affect how my offer when I put it under contract? Does my offer have to be $12,000 instead ($9K ask + $3K fines) or do I have to factor that into my asking price when I assign the contract? The spread on the deal is marginal as it is, and I'm trying to see if this one is worth pursuing. Obviously, there is more information needed to make an informed decision, but any advice would be appreciated, thanks.

These things need to be paid off from the proceeds from the sale if they are still do on sale.

So, if the seller wants to walk away with $9K and seller's closing costs (if you haven't offered to pay them) are $1,200, and the property has $3K in liens/taxes associated with it, the offer should be written up as $13,200.

It is whatever you can negotiate. 

The contract should spell this out. Ultimately it doesn't make much difference. If the seller wants $9K NET and he sticks with that, then it doesn't matter if you pay $9k and you pay the fines or $12K and he pays the fines. 

You may want to write it up in a way that limits how much you pay. Until a title search is don' the exact amount of back taxes and judgements won't be known and may be more than the expected $3K

@Larry T.  Thanks, I figured that would be the case if those were the terms we agreed on.

@Ned Carey  I see your point, it doesn't make much difference. If I were to put this one under contract, how would I word the conversation with the end-buyer? Would I tell them that there are $3K in fines (hopefully not more, but we won't know until a title search is done), and that that has been factored in to my asking price so that they know what they're getting?

Yes pretty much just discuss it with him and make sure you are both clear on What he is responsible for and what you are responsible for.  You don't want the seller to walk on a deal becuase he has $3000 of unexpected expenses. That is a big swing on such a small deal. 

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