1st position Lien question

[Herbert Cuthbertson]

Hello everyone, I have a question about a property that I'm hoping someone can clarify for me please. I have property close to being under contract (seller has contract being looks over). The property is paid off but the seller has an line of credit lien on the property. I'm trying to understand this particular process of hard money.

Will any Hard Money Lender approve a deal with a line of credit lien on the property? 

Secondly, if so, how does that work?.... For example.... If I'm purchasing a property for $100,000 and it has a $30,000 repair budget. Hard Money Lender lends me 70 percent of the ARV ($250000) equating to $175000 and funds 100 percent of the rehab ($40,000) which will come out to a hard money loan of $215,000. (Mind you I didn't extract any fees, down payment or points as this is just an example)

Having said the above, the seller has a lien on the property due to a $25k line of credit. Will the HML pay off this line of credit, freeing up the title, then take a 1st position Lien, and give the seller the remaining balance of $75,000 from the original purchase price? If so, will the seller be paid once I close the financing with the Hard Money Lender? Or will they get paid once I rehab and sell? I'm guessing it won't be the latter because of the length of time. Can some folks please chime in and let me know in order save me some potential issues about not only if the lien can can be satisfied by the lender but also if so, if the seller will be paid. I really appreciate the comments and thank you very much in advance. I'm continuing to learn a great deal scrolling through the many forums on this site.

[Wayne Brooks]

@Herbert Cuthbertson You don’t understand the basics of purchasing and/or hard money. 
1) the seller receives the purchase price at closing…from this, any liens on the property are paid off.

2) if a hml is lending up to 70% of ARV, that is it….Not 70% of ARV plus rehab costs. A down payment of some sort on the purchase will be required (10-25%).