Question on how to remove a seller's judment from a short sale house in contract

Hello, we are in contract to purchase a single home which is in short sale. The seller, and both lenders have approved the sale. We have ordered inspections and very close to closing. I just made tentanive arrangement for the termite treatment/tenting because we had reasonable expectations the we were going to close within a couple of days. Tonight I have received a call from our agent, who has explained that he has received a call from the sellers agent indicating that one of the owners of the property (there are two unrelated owners are on this property) has a judgment against her, and that we cannot close escrow until the judgment is settled. Wow!!! Since we have a binding contract signed by both sellers, and the banks, there are no leans against the property, does this seller have a legal ground and ability to stop or hold up the close of escrow? If so, what does it take to release the judgment attached to the property, since there are no proceeds to go to the sellers?

Thanks so much for taking the time to answer. We are very concerned as we have given notice and must move out within two weeks.

 

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Thank you for taking the time to answer. You are making some very valid points. Live and learn.... Our agent is working on helping this along to come to a workable solution. I do appreciate your time and information:)!

Another reminder to short sale listing agents to get title work done at the beginning of the listing.  The creditor might release its lien for a nominal amount, not the full balance, if the seller doesn't have the funds.

Thank you for your answer. I agree, the seller's agent could have done a better job all around. Fortunately our agent is working very hard to help with the release. (Now I know more since I posted the question:))!

Marta. A judgment is not necessarily a lien on the property. It is a "lien" against the person. So it can't be released from the property since it's not on the property. It will need to be settled.

Thank you

Something banks should also start doing before they list the REOs! Always a good idea.

 

Absolutely! Thanks

to answer your question perhaps an attorney would be able to have the solution for you. I know of a good one. if your interested give me a shout out thank you.

I appreciate the responses, thanks!

Marta, I agree with all of the responses given. The Seller's agent needs to find out what the lien is and should be addressing it. Do you know what the lien is and the amount. I have seen Liens such as credit cards, car loans, signature loans, etc. on homeowners. Many times they will accept as little as $500 to have the lien released from the property, but not from the owner, allowing the transaction to proceed. Sometimes the liens are old or are filed incorrectly and can be released based on that status. We have had very positive outcomes with many of these situations. Many times, due to misinformation, sellers are not aware the personal liens must be cleared to sell the home. If this is a great purchase price and your finances allow, maybe you as the buyer would be willing to contribute some funds to have it released. Most of the time it does not matter where the funds are coming from, but every situation is different. Try and find a solution to release the Lien. 

If you would like, have the agent contact me direct at [email protected] or call 717-460-7001 to discuss in more detail.  Don't give up, there is usually a way to "fix" it, the agent just needs to be very proactive. Chad. 

Thanks for your response! We do not know the origin of the judgment, but is is around 14K, we are not in a position to contribute to it, further more, this is something the seller racked up, and contributing to it, (even if we could) would be completely out of the question! The date of the judgment is Feb-March 2012, so it is relatively new. They may have thought that it will not show up, or did not realize. Ether way, the seller and their agent need to address is, but our agent is assisting now with this since now we know what can and needs to be done.

Sounds as though the Listing Agent may have partially done their due diligence on obtaining the searches early in the transaction and the Lien was not recorded at that time. Anytime there is an account in collections, it is best to follow up with them and make a contingency plan. As settlement approaches, a final bring down of current Liens/Judgments is ordered and now it is showing up. This is an unfortunate situation that occurs occasionally.

IF you had some funds to contribute, please do not think of it as contributing to "something the seller racked up" but rather as money going towards the purchase price. The seller may realize a payment may be a small price to pay to salvage this deal and be able to come up with a deposit to release the Lien and I have seen agents contribute as well. The point is, do not give up, keep searching for a way to help the Lien holder. I wish you the best of luck. Chad.

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