Hey Everyone,

I sent out my first direct mail campaign last week and got a call from, what I think to be. a hot lead. Here is the situation...

Owner is absentee and doesn't owe anything on the house, which I have verified. He said on the phone he owes 56k total to lawyers and delinquent hoa fees. The house is worth roughly 75-80k and I verbally told him I can pay $40k (assuming it checks out) which he was OK with.

With no bank involved, I am stuck on how I would handle the lawyer and HOA debts? If those weren't in the equation, I understand the purchase and sale agreement (with protecting myself so they are liable for any hidden debts tied to the house). Will this naturally be brought up once we submit papers to a title company for closing?

Please advise on my next steps and how to move forward. Please let me know if better clarification is needed.

Thanks in advance! 

Jonathan

Yes, those should be liens on property and the title company is responsible for ensuring that existing liens are satisfied before anyone else is paid from the transaction.  This also ensures that you (or the ultimate buyer) get a clean title.

@Jonathan Breines Sorry if this is a stupid question but are you paying him $40K and then he is still on the hook for the remaining $16 owed to lawyers/HOA? Or would you be on the hook for the remaining balance since you're technically the new owner?

As @Dev Horn mentioned, there will likely be liens to ensure those creditors are paid. Be sure you have an attorney or some other method for ensuring you get a clean title, if he is going to be on the hook for the remaining $16k. You could alter your PP and work out some sort of arrangement with the HOA to see if they will reduce the fees and that will reflect in your PP, or you could leave it up to him.

@Jonathan Breines

Welcome to Bigger Pockets. BP is full of resources. You will find resources here from blogs to pod casts and forums. You can also send messages to members. This is one of my favorite features of Bigger Pockets especially for asking specific questions.

Welcome to Biggerpockets! The title company assures what liens on on the home and will assist in getting a clean title. Reach out to HOA and see if they can work out in reducing fine, they may not speak to you if not homeowner but worth a try.