What happens when Contractors who have Mechanics Liens, file for Foreclosure?
I recently had a property in escrow that had a number of Labor and/or Material Liens filed on title. The seller was working with the contractors to negotiate the payoffs, but I noticed that one of the contractors filed a Foreclosure Action.
Title explained to me that if the Lien is 9 months old, they drop off title, UNLESS the Contractor files for Foreclosure. In that case title "stays" all Liens, regardless of age and they have to either be paid off or bonded over to close.
As it turned out on this property, the Lien in question "expired" one month prior to the Contractor filing for Foreclosure and so title did take it out and we closed.
Thanks for reading!
Julie
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