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I am buying a property which was renovated. Just before the settlement I found out that there is a lien on the property because the contractor did not get paid in full by the seller. I believe it is a mortgage lien, not a mechanical lien. If I do the closing, what is my liability? What documentation do I need to obtain do make sure that I will not have issues in the future.
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You should have a title search and examination done on the property in order to know what liens there are and what needs to be paid off in order for you to get clear title. It would be very odd for an unpaid contractor to have a mortgage on the house. That's really rare for an owner to give a contractor a mortgage. But it's possible. The contractor will have to be paid off -- if they haven't been paid already. Sometime private mortgage holders get paid and forget to satisfy the mortgage (because they don't know how or don't know they are to do that).
Answered on Apr 03rd, 2017 at 8:02 AM