How does a sellers property based debt affect your deal?

How does a sellers property based debt affect your deal?

Lets say that a house is foreclosed on or taken over by a government, bank, or tax entity. So if you were to buy it you wouldnt have to worry about any of the original owners' debt.

BUT, if you are buying a fsbo property or a pre-foreclosure, what must you do to protect yourself from acquiring the seller-caused liens or debt hidden and unhidden with or attatched to the property in the deal.

In other words, when you buy the property or assign someone else to buy it, the money that is paid for the property goes first to paying off loans and liens against the property? And what if the debt liability is greater than the sales price of the house. Does the new purchaser get stuck with that leftover debt, is it forgiven, or does it attatch itself back to the original owner himself?

I hope this question makes sense.


"We are what we believe we are.....
Only those who will risk going too far can possibly find out how far one can go...."

Use a title agent or lawyer

When you purchase a property be it a home, condo, vacant land etc you should always use a title agency or lawyer to handle your closings. You should get a Warranty Deed from them. They can not issue a Warranty Deed unless the title is marketable and all leins have been satisfied.

If the debt liability is greater than the purchase price then the owner would have to pay the remainder of what is owed. In other words the owner can not sell the property and have a Warranty Deed issued unless all leins are cleared.

I know different states have different rules and regulations. You should consult a real estate attorney in your area.

When I got started several years ago, I found a local lawyers office in my home town and used them for every deal. I built a life long friendship with the office manager/paralegal of the attorney. Anytime I have a question I can pick up the phone and call her or the attorney. The attorney always takes my calls because as he told me once "Rhonda, when your making money, I'm making money".

Don't be afraid to ask questions.

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