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How do you know if a foreclosed home has other liens on it?

  • February 04 2009 - San Francisco
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Answers (7)

Profile picture for DavidPlush
Be very careful that you are buying the first mortgage and not the second.

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David Anderton
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  • August 21 2010
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Wow, I was going to answer your question, but then I read Laura Coffey's answer and she is spot on, 100% right. Ask escrow. Ask your agent. But also check yourself with the water company, Sunset Scavenger, HOA, etc.
  • August 18 2010
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The reason you are purchasing title insurance is to insure the property is tranferred to you with no clouds/liens on title. The property will not be able to close escrow if the title company catches any liens that are not cleared. If for some reason they miss one the insurance will cover it. I noticed someone stated that escrow will check utility liens, never count on escrow! Especially in a short sale situation which the seller almost always demands their own escrow. Before you remove contingecies check the utilites in your area and the ability to do the transfer. Another issue that sometimes is overlooked is HOA payments being behind. Your real estate agent should check that for you but once again you should check yourself just in case.
  • August 14 2010
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A bank has to transfer title free and clean of ALL liens.  So if the pre-lim shows tax liens or utility liens or mechanics liens or anything those have to be taken care of prior to transferring ownership to you.  Your escrow officer will check the utility companies before closing escrow for anything that may have missed the pre-lim which is rare.  The reason you are purchasing title insurance is to insure the property is tranferred to you with no clouds/liens on title.
  • August 13 2010
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Other liens to be careful of are tax liens of various types. One seller I spoke to recently told me that she had B&O (business and occupation) liens on her home because she failed to pay the City of Seattle on some of her business income. Taxes are first position liens.

Some municipalities can also put liens on properties that survive closing, such as water bills. Clients of mine who had used other agents prior to me have had this hit them after closing. No one wants to be stuck with a $500 water bill before even moving in a house.
  • February 04 2009
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Most, but not all, liens will be recorded against the property. A title search will provide what is currently recorded.  It's worth it to run a 2nd check during the later part of a transaction because occasionally contractors will wait till an offer is in motion toward closing before attaching a lien and it can be a surprise at the end of the process.
  • February 04 2009
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They would have to be recorded, so you could go to the county recorder's office of the county where the property is located, and search their records.  It's easy, but time consuming.

You could also ask a title person to help you (if you know one), but if they miss it - you assume it.  You're better off checking yourself.

Another item to watch for is some cities are levying fines against forclosed homes ($250 per day, etc.) for being in disrepair and making the neighborhood look bad.  I saw one home that had over $17,000 in city fines against it.  You should also check with the city code enforcement department to see if any of that is hanging around.

You can get some great deals buying foreclosures, just be careful.
  • February 04 2009
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