Chances of clearing a fraudulent lien, risks in waiting to clear

[Janet Chi]

Hello,

I am currently in escrow on a home. It was listed at $1,088,500 and we offered $100k over asking. Almost 2 weeks into the process, it was discovered that there were 2 liens on the home. One lien was pretty small and was cleared, but the second lien was for $400k. Turns out, the guy, who placed the lien, bought the property to flip it. He had 2 loans on the property and ran out of money. The second lender was a hard money lender and he ended up buying out the note, foreclosing on the guy, and now owns the property.   We are in contract with this lender. The first guy did not have a contractor's license, which means that he has placed this lien fraudulently. Our escrow was extended a month in order to clear the lien. According to escrow, the petition to remove the lien was filed and when they went to get the judge's signature a few days later, they were told that their was a continuance and the next court date was scheduled for a month later.  There were a few items for which we requested credits for. I initially wanted to request about $36k in repairs, but my agents (sadly I went with a newbie and she has two "mentors" helping her) suggested this was too much and could jeopardize the contract (this was before discovery of the liens). I agreed to $24k in repairs and in the end, ended up with $12k. 

In the meantime, we opened escrow on our current home. We have a cash buyer who knows our situation and gave us a 45 day escrow, which takes us past this new court date. However our son needs to start school and we'd prefer him to start at his new school and not be moved around. We also have a cruise, that was scheduled months ago,  starting the day after the court date. 

I have a few questions:

- what is the possibility that the lien can not be cleared? And what happens in this case?  Escrow feels confident that it will be cleared and that it's an open and shut case because he didn't have a contractor's license. Are missing anything here? Am I being misinformed?  She also said that only one continuance is allowed, so it shouldn't go past this new date. Does this sound right?

- we were thinking of asking the seller to rent the property to us for free until the we close, up to 60 days. After that, we can renegotiate to extend this time or cancel the contract and begin a paid rent contract to last a year. Does anyone see risks in doing so?  Is this advisable?  Also, doing so allows us to close on our current home and ensure we don't lose our cash buyer.  But could we end up homeless?

- any other thoughts, suggestions, etc?

This has been an extremely frustrating and tedious process. I would be ever so grateful for any advice!

Thanks!