Taking Quit Claim Deed With Lien Good Idea Or Not?
I'm looking to aquire a property with a quit claim deed. However the property now has a lein on it. I should be holding onto the property for some time but my question is...
If the person who created the lein(borrowed the money) dies will their estate pay for the loan that that person guarranteed?
My thought is that if I sell the property I know I'll have to repay the loan but if I hold the property in the event of the original borrowers death that esate would be responsible for the repayment of the lein? Is this correct?
Unless there's some unusual arrangement for payment, liens generally stick to the property like a lamprey. That's why they are there, to prevent the owner from offering a clean title without paying them off. So if you buy it via QCD, you get it warts and all. And if you don't pay it--which is possible if you just want to hold/rent/whatever and don't need a clear title--you still run the risk of the lien foreclosing and then you have to pay it all at once or lose the property.
Maybe you could, with the seller's permission, get authorization to negotiate with the lien holder to settle for less than the full amount. It's not an unusual tactic. Lots of discussions about this in this forum, many in the Short Sale area.
Thanks! A clear title now is not a big issue. The origianl borrwer is very old in this case... If I take over the property and that person dies will the estate be responsible for payment. I understand the risk I'm taking but what about the estate, are they responsible for the debt ?
Odds are the estate is not responsible and even if they are and simply don't pay its you this bill is going to fall to.
Without more details its difficult to give more advice. What kind of Lien is it?
It was a personal loan guarranteed by the property.
Through a commercial bank!
Thanks for good advise... I really wasn't positive how this would work. The property is worth alot more than the lien anyway approx 100K more on the 93k lien I can't lose. But wanted to know this part for the future and hold time on the property.
The originator of the loan si willing to keep paying on the loan until they die. If he defaults I guess I could have a problem or not. It's an interest only loan 3.5% so the payment is not alot...
Just remember that you will ultimately be responsible for the lien, be it today or in ten years, and it will have to be resolved before any lender will lend on it, should you ever need to sell it. Maybe in ten years, given appreciation, you could pay it off--penalties and all--with pocket change, but it's possible that the lender could foreclose, and may given that it sounds like you have plenty of equity to tempt them. Then you'd have to pay off the lien in full or lose the property. But, with that much equity, a refi could take care of the lien handily, assuming you're getting it cheaply enough. Sounds like you've got it under control, just go in with eyes wide open.
THANKS AGAIN EVERYONE! THAT WAS MY OTHER OUT I COULD ALWAYS CASHOUT A LOAN PAY IT OFF AND TAKE THE EQUITY IN MY POCKET JUST BEFORE A SALE CONTRACT. SAVES ON TAXES...
I'M DOIN IT ! TOMORROW!
I wanted to offer you a last word of advice. You should seek competent professional advice before you make any decision. The comments and advice you receive in this web forum should be deemed for educational purposes only and should not be construed as legal or any other type of professional advice.
GOOD LUCK