Property Lien
If a short sale is done and the first is paid in full, but the 2nd is either partially paid or not paid at all. Will there be a lien on the property?? Would an investor still purchase property without a clear title. The owners are planning to file bankruptcy......Will this clear the title??
The first will disappear and the second will move into first position and will remain a lien on the property. This assumes that the second has not been a participant in the short sale. A short sale will extinguish a loan since the lender on the short sale is agreeing to take less than the amount owed on the loan in order to extinguish the debt.
Bankruptcy will not extinguish a loan necessarily. If a house is sold with the approval of the Bankruptcy Court in order to pay of debts, the lenders on the property have a secured loan but may be paid off when the new buyer gets financing. There are attorneys out there that are well paid to get Bankruptcy Courts to release property so that secured lenders can foreclose. The filing of BK may delay this but usually will fail in the long term.
If the first goes through foreclosure and when the house goes to sale and there is not enough to cover the 2nd.....does a lien still show up on the title??
It sounds like to do a short sale with a 2nd it is best to
also negotiate with the 2nd to get a clean title....The 2nd on the deal I am working on is almost $40K.....
A foreclosure is different than a short sale. If the first forecloses, some of the liens will be wiped out including a second. Some liens (if there are any) may survive such as property tax liens.
Keep in mind that if the first begins foreclosure proceedings, the second has a right to cure the default and begin foreclosure proceedings of their own.
I don't quite understand your last post since foreclosure should not be an issue with a short sale since the short sale will extingish the debt.