From: asylvain@felix.filenet.com (The Chipmunk)
Newsgroups: misc.invest.real-estate,misc.consumers.house,misc.consumers
Subject: Re: Making an Offer for a Home with a LIEN and Title Insurance
Date: 19 Aug 92 20:01:32 GMT
Reply-To: asylvain@fritz.filenet.com (The Chipmunk)
Distribution: misc
Organization: Foundation for the Increased Wealth of Chipmunks

Written in article <AMALIK.92Aug18122141@bubba.ma30.bull.com>
 by amalik@bubba.ma30.bull.com:

: I had posted this earlier but did not see any responses on the net and
: did not get any responses mailed to me.  I am re-posting it.

I'll bet there's a site out there with about 3 million articles and
e-mail messages sitting in a queue, and as soon as the operator notices
it ... WHAM! you'll be FLOODED!  B-{)

: We are thinking of making an offer to a house.  But, we found out 
: from the seller's lawyer that there is a lien attached to the home.
: Since I had never heard of liens, I would like to get some advice as 
: to 

A lien means the seller of the house owes somebody money for something.  
In particular, there are "mechanics' liens" where, eg, somebody does 
some landscaping or what-have-you, but the owner doesn't pay.

We built a common wall between ours and our neighbor's properties, and
both of parties agreed to pay half.  Since we were aware of the neighbor's
financial difficulties, we convinced the contractor to give us each a
separate contract.  We dutifully paid our half, but guess what? the
neighbor never paid.

The contractor probably put a mechanics lien against them, but they've
since been foreclosed, so the contractor probably lost.  (First trust
deeds have priority over mechanics liens.)  Fortunately for us, we had a 
separate, paid-in-full contract, so we were never involved.

Mechanics' liens can also victimize a perfectly well-intended
homeowner, who just gets screwed.  It's been known for a homeowner to
contract some labor, say building a block-wall with iron-work, and
dutifully pays what's owed.  Now, it turns out that the contractor
sub-contracted somebody to put up the iron-work, and does NOT pay the
sub.  Well, the sub can but a lien against the homeowner.

Unfortunately, I do not recall the legal remedy to this situation.

: - should we not make an offer in a situation like this 

Depends.  Off-hand, knowing nothing else about the situation, I would not.
But, you're closer to it, you know more of what's going on, so you may 
have reason to carry through anyway.  Is it a case of an angry contrac-
tor or sub-contractor?  Is it a tax-lien?  What's the deal?

For example, suppose you wanted to buy my neighbor's house, before he
was foreclosed.  Suppose the lien is for $4k for his unpaid half of the 
block-wall.  Assume you and my neighbor have agreed to a price, then you 
find out about this lien.  You might want to simply negotiate an 
additional $4k discount, and simply pay off the lien.

Since you haven't made and offer yet, negotiations may be more difficult.
The seller can always claim they've ALREADY taken the lien into account 
in the price they selected.  But stick to your guns.  It's a soft market, 
play hardball.

: - if we do consider making an offer, then what should one
:   look out for and are there any special procedures in the
:   making/writing an offer, getting a real-estate lawyer, 
:   home-insurance etc. in order to get a clear title.  

A lawyer might not be a bad idea.  There could be legal complications.

:   What is covered in the title insurance?

Since the lien is known and current, title insurance will probably be of
little use.  Title insurance would cover you if you found out about any
liens AFTER buying the house and closing escrow.

: I would
: prefer if you e-mail the responses to me directly since I hardly 
: read news.

YOU HARDLY READ NEWS????  Why that's, that's, that's HERESY!!

-- 
The Chipmunk.
Opinions are mine, void where prohibited, taxed, licensed or regulated.
No man's life, liberty, or property are safe while the legislature 
is in session.
Newsgroups: misc.invest.real-estate,co.general,misc.forsale