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  1. #1
    thearena10 is offline Junior Member
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    Missed lien on title search

    New Jersey law.

    My brother and I were beneficiaries on an estate and sold the property back in 6/2008. We have now been informed, almost 2 years later, that there is an existing lien on the property that was missed at closing. The lien was placed by the County for some work that was done on the property, specifically a new oil well was dug and the owner was required to live there for 10 years for the debt to be forgiven.

    This lien apparently does not get absolved when the owner dies, and both the buyer and seller's attorneys claim the County made a mistake by informing them the lien was no longer in effect at the time of closing.

    So now the County has contacted the buyer's attorney requesting payment of $15k on the lien. The buyer's attorney contacted our attorney, who has been trying to persuade us to pay the lien as the beneficiaries of the estate. I don't really understand why he is pushing us to pay it, since the lien is currently on the house and with the current owner/buyer.

    But in any event, the buyer had title insurance on the purchase of the home, and from everything I've read, the buyer should be contacting the title company to pay off the debt. I don't really now what happens then at the title company. Our lawyer is stating they will pay it off and then turn around and sue us as beneficiaries for the debt + court costs and attorney fees.

    Note that neither my brother nor I were aware of the debt at the time of closing. So since we were not negligent or committed fraud during the sale of the house, will the title company still sue us?

    I'm leaning towards not paying anything until we are contacted by the title company. Any advice?

    Thanks so much in advance.
  2. #2
    HomeGuru is offline Senior Member
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    Quote Originally Posted by thearena10 View Post
    New Jersey law.

    My brother and I were beneficiaries on an estate and sold the property back in 6/2008. We have now been informed, almost 2 years later, that there is an existing lien on the property that was missed at closing. The lien was placed by the County for some work that was done on the property, specifically a new oil well was dug and the owner was required to live there for 10 years for the debt to be forgiven.

    This lien apparently does not get absolved when the owner dies, and both the buyer and seller's attorneys claim the County made a mistake by informing them the lien was no longer in effect at the time of closing.

    So now the County has contacted the buyer's attorney requesting payment of $15k on the lien. The buyer's attorney contacted our attorney, who has been trying to persuade us to pay the lien as the beneficiaries of the estate. I don't really understand why he is pushing us to pay it, since the lien is currently on the house and with the current owner/buyer.

    But in any event, the buyer had title insurance on the purchase of the home, and from everything I've read, the buyer should be contacting the title company to pay off the debt. I don't really now what happens then at the title company. Our lawyer is stating they will pay it off and then turn around and sue us as beneficiaries for the debt + court costs and attorney fees.

    Note that neither my brother nor I were aware of the debt at the time of closing. So since we were not negligent or committed fraud during the sale of the house, will the title company still sue us?

    I'm leaning towards not paying anything until we are contacted by the title company. Any advice?

    Thanks so much in advance.
    **A: your attorney should make a claim against the title insurance company.
  3. #3
    thearena10 is offline Junior Member
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    Quote Originally Posted by HomeGuru View Post
    **A: your attorney should make a claim against the title insurance company.
    Ok, but would we be responsible should the title company file suit?
  4. #4
    HomeGuru is offline Senior Member
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    Quote Originally Posted by thearena10 View Post
    Ok, but would we be responsible should the title company file suit?
    **A: responsible for what?
  5. #5
    justalayman is offline Senior Member
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    that there is an existing lien on the property that was missed at closing.
    what do you mean it was missed? Who missed it? You claim you were aware of it:

    This lien apparently does not get absolved when the owner dies, and both the buyer and seller's attorneys claim the County made a mistake by informing them the lien was no longer in effect at the time of closing.
    It appears you, the buyers, all attorneys, and the county were all aware of the lien at the time as apparently it was discussed so just who missed the lien?
  6. #6
    thearena10 is offline Junior Member
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    Quote Originally Posted by HomeGuru View Post
    **A: responsible for what?
    Responsible to pay off the lien.
  7. #7
    thearena10 is offline Junior Member
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    Quote Originally Posted by justalayman View Post
    what do you mean it was missed? Who missed it? You claim you were aware of it:



    It appears you, the buyers, all attorneys, and the county were all aware of the lien at the time as apparently it was discussed so just who missed the lien?
    The County made the error and informed the attorneys and title company that there was no lien on the house. Apparently someone from the County thought the lien was released when the owner dies, but this was not the case in this particular lien.

    All of us only found out now that the lien does not go away even after death.
  8. #8
    Zigner is offline Senior Member
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    Quote Originally Posted by thearena10 View Post
    The County made the error and informed the attorneys and title company that there was no lien on the house. Apparently someone from the County thought the lien was released when the owner dies, but this was not the case in this particular lien.

    All of us only found out now that the lien does not go away even after death.
    And your real-estate attorney didn't know this? Really?
  9. #9
    justalayman is offline Senior Member
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    Quote Originally Posted by Zigner View Post
    And your real-estate attorney didn't know this? Really?
    and the title company and the other party's attorney.



    The County made the error and informed the attorneys and title company that there was no lien on the house
    do you have that in writing from the county?



    I think it's odd that the county (and for some reason I am not thinking the attorney for the county) provided a legal opinion for 2 attorneys and a title company and of the one that would least likely be correct, they all accepted as being correct.

    I would suggest somebody do some actual research to determine what the real truth is. Just because the county claims they made a mistake then and has not realized they were wrong doesn't mean they are right.


    and because you relied on several sources for the situation of the lien, including your attorney, if you are held liable, I believe you have an action against your attorney for his error.

    I would suggest the 2 attorneys, the title insurer, and the county treasurer all sit down and figure out which of them is going to pay because it shouldn't be you.
  10. #10
    thearena10 is offline Junior Member
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    Quote Originally Posted by justalayman View Post
    and the title company and the other party's attorney.



    do you have that in writing from the county?



    I think it's odd that the county (and for some reason I am not thinking the attorney for the county) provided a legal opinion for 2 attorneys and a title company and of the one that would least likely be correct, they all accepted as being correct.

    I would suggest somebody do some actual research to determine what the real truth is. Just because the county claims they made a mistake then and has not realized they were wrong doesn't mean they are right.


    and because you relied on several sources for the situation of the lien, including your attorney, if you are held liable, I believe you have an action against your attorney for his error.

    I would suggest the 2 attorneys, the title insurer, and the county treasurer all sit down and figure out which of them is going to pay because it shouldn't be you.
    I don't have anything in writing of anyone taking responsibility for the mistake unfortunately. I don't exactly know how a title search works, so I can't say where the fault lies. I just hope not with me.

    This is what the County letter says:

    "This office placed a ten year lien on the property due to work that was completed with federal funds by the Department of Housing and Urban Development."

    And this was the lien consent wording which was recorded with the county 3.5 months prior to closing:

    "The Undersigned acknowledge and agree that in the event the said premises are sold by them, their executor, successors, heirs of assigns within a period of Ten(10) years from the date of the filing or in the event there is a transfer of title, then in either event, the County of Morris shall be paid and reimbursed to the County by them in full amount of the grant proceeds."
  11. #11
    justalayman is offline Senior Member
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    And this was the lien consent wording which was recorded with the county 3.5 months prior to closing:

    "The Undersigned acknowledge and agree that in the event the said premises are sold by them, their executor, successors, heirs of assigns within a period of Ten(10) years from the date of the filing or in the event there is a transfer of title, then in either event, the County of Morris shall be paid and reimbursed to the County by them in full amount of the grant proceeds."
    Uh oh.

    there is nothing unclear about that and I find it hard to believe anybody from the county would tell you anything to the contrary that that you are liable for the repayment of the grant.

    I also find it hard to believe the title insurer would even consider paying on this as they include in their exclusions, all liens, encumbrances, liens, and whatever of public record and since this was recorded when it was, it was public record at the time of the sale.

    You are on the hook. The only thing I can see is you make a claim against your attorneys E and O insurance for his mistake in his statements to you.
  12. #12
    thearena10 is offline Junior Member
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    Quote Originally Posted by justalayman View Post
    Uh oh.

    there is nothing unclear about that and I find it hard to believe anybody from the county would tell you anything to the contrary that that you are liable for the repayment of the grant.

    I also find it hard to believe the title insurer would even consider paying on this as they include in their exclusions, all liens, encumbrances, liens, and whatever of public record and since this was recorded when it was, it was public record at the time of the sale.

    You are on the hook. The only thing I can see is you make a claim against your attorneys E and O insurance for his mistake in his statements to you.
    I understand that we would be on the hook if this was found prior to closing, but it was not. I only received a copy of this info last week. It was signed by my grandfather. I had no idea the lien even existed. Isn't it the attorneys and title company responsibility to have uncovered this document prior to closing and make a determination of its validity? Doesn't the title insurance cover a missed lien in this case?
  13. #13
    justalayman is offline Senior Member
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    you said it was recorded 3 1/2 months before closing.. I don't understand how you claim it was not known at closing.


    ? Doesn't the title insurance cover a missed lien in this case?
    did you purchase title insurance? The buyers policy wouldn't cover it.

    Here is what I think (don't worry, I don't think a lot)

    Somebody reserched the title. Rather than reading the actual lien, they took the word of the county folks who CORRECTLY stated the lien does not transfer with the property (because it doesn't). The lien becomes payable by your grandfather or subsequent holders of interest as listed on the lien document. It states upon transfer that it becomes payable by grandfather or anybody in the list so, as far as the buyers title insurance goes, they have no lien to pay and shouldn't pay anything. The buyers are not liable for the lien either.

    That leaves you. Now, depending on what your attorney told you, you might have a claim against him but I do not know what your attorney told you.

    It actually should have been taken from your sales proceeds by the closing agent but I'm betting somebody (maybe your attorney) convinced them the lien died based on the misunderstood (I suggest it was not erroneous but actually correct but misunderstood) statement from the county.
    Last edited by justalayman; 05-28-2010 at 12:21 AM.
  14. #14
    thearena10 is offline Junior Member
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    Quote Originally Posted by justalayman View Post
    you said it was recorded 3 1/2 months before closing.. I don't understand how you claim it was not known at closing.


    did you purchase title insurance? The buyers policy wouldn't cover it.

    Here is what I think (don't worry, I don't think a lot)

    Somebody reserched the title. Rather than reading the actual lien, they took the word of the county folks who CORRECTLY stated the lien does not transfer with the property (because it doesn't). The lien becomes payable by your grandfather or subsequent holders of interest as listed on the lien document. It states upon transfer that it becomes payable by grandfather or anybody in the list so, as far as the buyers title insurance goes, they have no lien to pay and shouldn't pay anything. The buyers are not liable for the lien either.

    That leaves you. Now, depending on what your attorney told you, you might have a claim against him but I do not know what your attorney told you.

    It actually should have been taken from your sales proceeds by the closing agent but I'm betting somebody (maybe your attorney) convinced them the lien died based on the misunderstood (I suggest it was not erroneous but actually correct but misunderstood) statement from the county.
    This is what the lawyer claimed in his letter to us:

    "At the time of the sale, we were erroneously informed that the loan need not be paid off if owner passed away. This was incorrect information and the Division is now seeking to be paid."

    The County has contacted the Buyer's attorney regarding payment of the lien. If the lien did not stay with the property, then I thought they would be contacting us for that payment. The County also stated in their letter that the lien was placed on the property. Why do you think the lien is not on the property?
    Last edited by thearena10; 05-28-2010 at 11:29 AM.
  15. #15
    justalayman is offline Senior Member
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    "The Undersigned acknowledge and agree that in the event the said premises are sold by them, their executor, successors, heirs of assigns within a period of Ten(10) years from the date of the filing or in the event there is a transfer of title, then in either event, the County of Morris shall be paid and reimbursed to the County by them in full amount of the grant proceeds."

    The lien was for a conditional grant and was something your g-pa had the option of accepting or not apparently . He agreed that it would be repaid so it must be repaid. That is one of the points of a lien, so the underlying debt will be paid upon transfer of the property. This one was clearly written, very clearly written, that your g-pa or successors would be required to pay this when the property transferred title. So, title transferred, you owe.

    Now, as to who is liable. You and your attorney are somehow claiming somebody in the county made the claim the lien would simply disappear. This is where I believe your attorney might have misunderstood what s/he was told. I would have to guess the county said "it doesn't transfer with the transfer of title" and your attorney somehow heard that the lien simply would disappear. Since your attorney's duty is to research, understand, and advise you to the situation, it sounds like it was his error although that is just my guess based on what I have read here.

    I simply cannot understand why your attorney would ever think the lien would simply disappear. It makes absolutely no sense. Why would there be a lien that simply goes away due to a transfer of title. Unrealistic belief.

    So, since the lien obviously does terminate upon transfer of the property (as it is required to be paid upon transfer), the buyers are not liable for anything. The buyers title insurance is not liable for anything. You cannot prove the county said what you claim but even if you could, the county person, unless it was the attorney for the county, was a layperson. Your attorney taking legal advice, that is obviously suspect (to anybody that deals with RE in any manner) is his mistake. He advised you based on his mistake, he is liable for the error.

    So, you are liable but you might have a claim against your attorney.

    Now, this is with the presumption your contract with the attorney covers this. Not knowing precisely your relationship with the attorney, I can see many ways he would not be liable which would mean it's back to you.

    If the lien did not stay with the property, then I thought they would be contacting us for that payment
    from what you posted, they shouldn't be contacting the buyer. It clearly states you have the liability.

    The County also stated in their letter that the lien was placed on the property.
    do you mean reinstated against the property after the sale? I do not believe they could sustain the lien if the buyers argued it in court but the easiest action for the county is: tag the property with the lien, make the buyer believe they must pay. They pay and since they are actually not liable, they sue you, the rightful debtor, and all is well in Morris county again.

    . Why do you think the lien is not on the property?
    because the lien specifically states it is to be paid upon the transfer and as such, it would be extinguished. The problem is where the county was not paid when they were legally entitled to be paid so as I said, they easy route for them is to claim the lien can be reattached to the property. I do not see how it can be. It simply becomes your debt to the county. The error of them not being paid does not mean they can simply transfer the lien to the new owners. The lien is not written in such a manner that would allow for that.

    So, basically this comes down to:

    You owe. There is no doubt. Now, if you have a claim against somebody else is the question I cannot answer.

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