A seller just contacted me: he has a 1st and 2nd with Wells Fargo. Then, he told me he has $7k left on a new HVAC system that was installed last year. This was financed by the HVAC company (or at least on some sort of unsecured credit.)
Any ideas on what to do with this $7k debt? It is not a lien against the home, but I am sure that we can not pass clear title if this unsecured debt is not paid. The HVAC is considered a 'fixture' - a part of the home. I am sure that, legally, the Seller can not just leave the unpaid system with the home and just walk away with the credit.
Am I overthinking this?
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Here is an update: I spoke with my attorney and he said that usually whenever something like this is purchased on credit, then a UCC financing statement is filed which acts just like a lien. So, we would have to take care of that.
If he paid for it on a credit card, then it shouldn't be a problem
Alright... this is good to know. Yes, I believe we have 180 days for the mechanics lien too. I guess I was thinking of some other code (something like UCC?) wherein title could not pass if installed equipment was not completely paid.
You raised a good point about the title company not including it as an exception. I would have to ensure well before closing that the lien waiver could be truthfully completed.
Thanks!
if it's not on title, it becomes a personal debt to seller.
I wouldn't be so sure that you can't close with this debt remaining unpaid. In Colorado I believe contractors have only 6 months to file a mechanics lien. The seller would still owe money and the contractor could probably sue and win if they signed a contract, but probably not attach a lien to the property. See if the time has run out on the filing of a new mechanics lien, then have your title company agree to not include it as an exception and you should be good to go.
Keep us posted!
Oh, yeah.. I am not an attorney and this is not legal advice. :-)