5 ms·

> the property can only be sold if everything is OK with it (no litigation, liens, etc), and taxes are owed by persons? Is it different over there? This could

by 1-more 3mo ago

> the property can only be sold if everything is OK with it (no litigation, liens, etc), and taxes are owed by persons? Is it different over there? This could vary by jurisdiction, but as I understand it, taxes and liens are attached to the property itself. "Clean title" can be a contingency of offer: buyer can back out and get back their earnest money (aka deposit) if the property has liens/encumbrances that are not written down in the sales contract (example clause at the link at the end). When you buy the place, you get title insurance, often mandated by your mortgage lender. The title insurance company does a title search on the property to find liens and owed money on the property and then sells you an insurance policy saying that they'll make it right if they missed anything during their search. This is because your mortgage lender never wants to be second in line to get their hands on the property to recoup in case you default on your mortgage. Liens on the property should be easy to find because they're supposed to be registered with the local municipality: maybe the city you're in, maybe the county, maybe the state, idk I think it depends. In practice, maybe some roofer/plumber/landscaper forgot to do that and now you have a problem you didn't know you had. That's what the insurance is for. The property _status_ is not knowable so much as the _status transitions_ are knowable: when was a lien attached or removed from the property, so that's why it involves a private company looking it up. You'd think it'd be a public good, but it's not. Odd. As an example: when I bought my current place, the previous owner was financing the furnace which included free annual service from the installer. He wanted us to take over the payments. We asked him to convey without encumbrances, meaning pay off the balance with the furnace company before we'd close on the house. If he had refused, we could have backed out of the sale because our offer said that we were only willing to buy without owing anyone anything. https://www.lawinsider.com/clause/title-contingency https://www.lawinsider.com/clause/title-contingency

HeyLaughingBoy 3mo ago
As an aside, I'm told that Title companies make absolute bank. Most buyers get title insurance, but the insurer very rarely ever has to make a payment.
- pwg 3mo ago
  > Most buyers get title insurance, This is because all lenders require title insurance as a requirement for receiving the loan monies. So for almost all buyers they have no choice, their bank/credit union that is actually putting up most of the money forces it upon them.
  - HeyLaughingBoy 3mo ago
    Not all buyers are using loans. First house I sold was to someone who refused title insurance because in his words, "that house has been sold 3 times in 10 years, the title's fine."
    - 1-more 3mo ago
      I swear I heard this same story elsewhere online. Maybe it was here in another thread.
sfn42 3mo ago
> In practice, maybe some roofer/plumber/landscaper forgot to do that and now you have a problem you didn't know you had Seems to me like this should be the contractor's problem. If they did the job 2 weeks ago fine, but if they come along 6+ months later after the house is sold demanding payment from the new owner that seems ridiculous to me. Surely if these Liens are supposed to be public there needs to be a requirement that they are registered as soon as possible. Otherwise it seems to me like this is a ripe opportunity for scams. Buy house, have contractors refurbish it, sell it for a much higher value, then the contractors register their debts and now the new buyers or their insurance is on the hook for the refurbishment.
- quickthrowman 3mo ago
  > Otherwise it seems to me like this is a ripe opportunity for scams. Buy house, have contractors refurbish it, sell it for a much higher value, then the contractors register their debts and now the new buyers or their insurance is on the hook for the refurbishment. This is called ‘fraud’, it is already illegal. Mechanic’s liens are good and necessary for customers like the current US President who fail to pay their contractors.
  - sfn42 3mo ago
    Yeah I don't have a problem with liens, I have a problem with unregistered liens. There needs to be a system for registering and searching liens, it needs to be publicly accessible and the lien needs to be registered before it's valid. In order to register a lien on a car you need the owner's signature, that can't work when the owner has changed. Mechanic needs to get the contract signed then report the new lien to wherever it should be reported, and once that's all in order they can start working on the vehicle. If they try to register their lien once the owner of the vehicle has changed, it can not be accepted. You can't secure debt with a vehicle you no longer own. The lender needs to make sure the person owns the car and register the debt while they still own the car. And if they sell the car then they have money to pay the debt, and since they no longer own the car then their debt is no longer secured so that should trigger a requirement to pay the debt per the loan contract. Debt should be owned by people not objects. The whole concept of debt that's attached to objects is silly. It can make sense in certain situations like a housing association that's taking up a shared loan and paying it down as part of shared monthly expenses, but for a car repair or similar it makes no sense. The person who takes the debt is responsible for the debt. If they sell the car then they pay the debt with the money from the sale, if the sale doesn't cover the debt then they still owe the rest. It does not need to be any more complicated than this. In order for anyone to take over responsibility for debt in relation to a purchase, there needs to be explicit written and signed consent. So - I can buy a house including some debt if I know and agree to it, but I can't unwittingly buy a landmine. If the owner fails to resolve their debts when they sell that should be their problem not the buyer's. It's up to the bank to collect their debts from the person they have a contract with.

by 1-more 3mo ago

HeyLaughingBoy 3mo ago

As an aside, I'm told that Title companies make absolute bank. Most buyers get title insurance, but the insurer very rarely ever has to make a payment.

pwg 3mo ago
> Most buyers get title insurance, This is because all lenders require title insurance as a requirement for receiving the loan monies. So for almost all buyers they have no choice, their bank/credit union that is actually putting up most of the money forces it upon them.
- HeyLaughingBoy 3mo ago
  Not all buyers are using loans. First house I sold was to someone who refused title insurance because in his words, "that house has been sold 3 times in 10 years, the title's fine."
  - 1-more 3mo ago
    I swear I heard this same story elsewhere online. Maybe it was here in another thread.

sfn42 3mo ago

> In practice, maybe some roofer/plumber/landscaper forgot to do that and now you have a problem you didn't know you had Seems to me like this should be the contractor's problem. If they did the job 2 weeks ago fine, but if they come along 6+ months later after the house is sold demanding payment from the new owner that seems ridiculous to me. Surely if these Liens are supposed to be public there needs to be a requirement that they are registered as soon as possible. Otherwise it seems to me like this is a ripe opportunity for scams. Buy house, have contractors refurbish it, sell it for a much higher value, then the contractors register their debts and now the new buyers or their insurance is on the hook for the refurbishment.

quickthrowman 3mo ago
> Otherwise it seems to me like this is a ripe opportunity for scams. Buy house, have contractors refurbish it, sell it for a much higher value, then the contractors register their debts and now the new buyers or their insurance is on the hook for the refurbishment. This is called ‘fraud’, it is already illegal. Mechanic’s liens are good and necessary for customers like the current US President who fail to pay their contractors.
- sfn42 3mo ago
  Yeah I don't have a problem with liens, I have a problem with unregistered liens. There needs to be a system for registering and searching liens, it needs to be publicly accessible and the lien needs to be registered before it's valid. In order to register a lien on a car you need the owner's signature, that can't work when the owner has changed. Mechanic needs to get the contract signed then report the new lien to wherever it should be reported, and once that's all in order they can start working on the vehicle. If they try to register their lien once the owner of the vehicle has changed, it can not be accepted. You can't secure debt with a vehicle you no longer own. The lender needs to make sure the person owns the car and register the debt while they still own the car. And if they sell the car then they have money to pay the debt, and since they no longer own the car then their debt is no longer secured so that should trigger a requirement to pay the debt per the loan contract. Debt should be owned by people not objects. The whole concept of debt that's attached to objects is silly. It can make sense in certain situations like a housing association that's taking up a shared loan and paying it down as part of shared monthly expenses, but for a car repair or similar it makes no sense. The person who takes the debt is responsible for the debt. If they sell the car then they pay the debt with the money from the sale, if the sale doesn't cover the debt then they still owe the rest. It does not need to be any more complicated than this. In order for anyone to take over responsibility for debt in relation to a purchase, there needs to be explicit written and signed consent. So - I can buy a house including some debt if I know and agree to it, but I can't unwittingly buy a landmine. If the owner fails to resolve their debts when they sell that should be their problem not the buyer's. It's up to the bank to collect their debts from the person they have a contract with.