Rental Property Investor · PA · Member since 2019 · 6 posts · 1 vote
I am due to close on my first duplex in PA in about two weeks and the title search just came back with judgments (about $42k) and liens (about 8k) for the seller, who owns the property outright. What does this mean to me? I spoke with the seller and he states he is going to negotiate this down and pay it so he can sell the place but my question is this- what do I do? From my understanding all of the 50k would need to be paid (or the negotiated total) prior to me being allowed to settle, correct? Would he have the options to pay the 8k of liens and create some sort of negotiated plan for him to pay the rest of the 42k after he sells since he owns it outright? Lets say best case scenario it does get settled and a clean title search comes back, is there anything else I should watch out for? Any advice or guidance would be greatly appreciated as I am completely new to RE investing. Thanks!
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
5y
The attorney will have to pay these off from the sellers proceeds at closing. Then you should get a title insurance policy giving you warranty on the the title of property.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
5y
The attorney will have to pay these off from the sellers proceeds at closing. Then you should get a title insurance policy giving you warranty on the the title of property.
Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
5y
@TJ C. The information provided by @John Underwood is spot on. The only issue you may run into is how long will it take the seller to negotiate a lower payoff ? That can take a long time and never happen at all. Hopefully the seller has enough proceeds from the sale to pay off all liens. If they dont have enough funds from the closing and they dont have any extra cash to pay off the liens you could be at a standstill. Your agent and or your attorney should advise you.
Investor · Orlando, FL · Member since 2013 · 837 posts · 316 votes
5y
@TJ C. You definitely want it paid prior to or at closing from proceeds with a clear title policy as @John Underwood I have done closings where a holdback is taken from the seller's proceeds for the full payoff amount and then it is held in escrow by the title company or attorney. That gives the seller some time and ability to negotiate the discount. Then the funds are released to satisfy the payoff and the seller receives the difference. The holdback needs to have an end date and account for any additional interest or penalties that might occur during that time. If the proceeds don't cover the payoffs then it would need handled and negotiated ahead of time. You want good legal counsel for certain.