Steps to Take if a Title Search Reveals a Lien on a Potential Property

 Posted on June 12, 2024 in Real Estate Law

Purchasing a property can be an exciting venture, but ensure the property is free from legal complexities. One such issue that may arise during the title search process is the discovery of a lien on the property. If you find yourself in this situation, try not to panic. A Connecticut lawyer can help you with the steps to navigate the process and protect your investment.

Make Sure You Understand the Type of Lien

The first step is identifying the type of lien attached to the property. In Connecticut, common types of liens include:

• Mortgage liens
• Mechanic’s liens (for unpaid construction work)
• Tax liens (for unpaid property taxes)
• Judgment liens (resulting from court judgments)

Each type of lien has its own legal implications and resolution processes. Understanding the nature of the lien will help you determine the best course of action.

Communicate with the Seller

Once you have identified the lien, have an open and honest conversation with the seller. In most cases, the seller is responsible for resolving any liens on the property before the sale is finalized. Work with your real estate attorney to notify the seller of the lien and request that the individual take action to clear it.

Investigate the Lien’s Validity

Not all liens are valid or enforceable. Your attorney can help you investigate the lien to determine its legitimacy. This may involve reviewing documentation, contacting the lienholder, and researching the statute of limitations for enforcing the lien under Connecticut law. If the lien is found to be invalid, you may be able to proceed with the purchase without further action.

Negotiate with the Lienholder

If the lien is valid, your attorney can assist in negotiating with the lienholder to resolve the issue. This may involve:

• Requesting that the seller pay off the lien
• Negotiating a reduced payoff amount
• Arranging for the lien to be released upon closing

In some cases, you may be able to purchase the property with the lien in place and address it after closing. However, this is generally not recommended, as it can lead to legal complications down the road.

Consider Title Insurance

Title insurance is a valuable tool for protecting your investment in the face of liens and other title issues. When purchasing a property in Connecticut, you will typically have the option to buy owner’s title insurance. This policy protects you against financial losses resulting from liens, defects, or other issues with the property’s title that were unknown at the time of purchase.

While title insurance will not prevent liens from existing, it can provide coverage for legal fees and other costs associated with resolving them.

Know When to Walk Away

In some cases, the best course of action may be to walk away from the deal. If the seller is unwilling or unable to resolve the lien or its legal and financial implications are too complex, it may be wise to search for another property. Your real estate attorney can provide guidance on when walking away is the most beneficial choice.

Contact a Stamford, CT Real Estate Lawyer

Discovering a lien on a property during the title search process can be stressful, but it does not have to derail your real estate goals. A Fairfield County, CT real estate attorney can help point you in the right direction so you can determine if the potential investment is a wise choice. Call Law Offices of Daniel P. Weiner at 203-348-5846 to start the process with a free consultation.