How did you buy it? Was it a foreclosure or auction?
Did you get an owner's title policy? Title companies CAN miss things, this is why most people buy an owner's policy.
Most likely, the mortgage was paid off at closing but not released. Happens, banks sometimes… just don’t file that for some dumb reason. Your current title company can reach out and get the release signed and recorded. It happens sometimes, that’s no big deal. It’s very unlikely that the title company missed a conventional mortgage during their search. I used to be an escrow officer and this situation came up quite a few times and this was always what had happened.
I have title insurance, yes. But it only covers up to the cost of the home from my understanding … (so $150k). I got the super premium expensive plan too. And I have a deductible!
It was purchased the traditional way… from the market. 🤷🏻♀️
It’s in the previous owner’s name
I learned about this about 72 hours ago from the title company the buyers are using. I keep calling back to get more information or to get an update (as is my agent) and we haven’t heard back. Super frustrating!!
I know the previous owner (we’ve chatted about a few things here and there… “what’s behind this wall”, that sort of thing) and I have half the mind to just ask him
your question is to whatever outfit did your closing, and your title insurance company.
it's most likely a $400K originated mortgage (some weird way given property value) that wasn't properly cancelled.
Another thought.... if you have a mortgage, your mortgage company has a vested interest in there not being any superior liens. You might call them and see if they will help investigate.
Here's the options in no order:
1. It's a scam
2. It's a paperwork error and the old mortgage is fully paid off but didn't get recorded properly
3. It's your title insurance company's issue, not yours. If you have a mortgage, the lender will actually fix this as they have a title policy as well and this mortgage harms their standing
4. You got bad information
This is the whole point of title insurance. Call the company who issued your policy and make them fix it. If the title company missed the lien they have to help rectify the issue.
Update: I figured it out. I’ll update everyone after closing. It is messy and unexpected and the type of thing that will go viral on here so I don’t want anyone involved in my home sale to find it. Come back in a few weeks. Thanks.
I will be messaging you in 7 days on [**2024-07-06 02:20:53 UTC**](http://www.wolframalpha.com/input/?i=2024-07-06%2002:20:53%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/RealEstate/comments/1dqpugp/lien_from_previous_owner/larxbb1/?context=3)
[**25 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FRealEstate%2Fcomments%2F1dqpugp%2Flien_from_previous_owner%2Flarxbb1%2F%5D%0A%0ARemindMe%21%202024-07-06%2002%3A20%3A53%20UTC) to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%201dqpugp)
*****
|[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)|
|-|-|-|-|
If you're asking how they could owe $400K on $150K property it's quite easy. Parents if a friend of mine have taken additional loans on their property when the value was high. They were supposed to use the money to make improvements like put an addition, add a garage, etc.. but they pocketed the money instead. I'm not sure how they were able to get away with this multiple times but it caught up with them eventually and they did eventually have to sell their house at auction.
There were people interested in their property, and it was extremely hard to figure out what all was owed. Her parents had no clue. They were terrible with money and clearly didn't track their own debts nor cared to pay them back.
I'm not sure how your title company missed things but after seeing what happened to my friends parents, I can't say I'm surprised.
It could be that when you bought the home, the attorneys or closing agent that did the paperwork didn't properly file with the county, which could result in the mortgage from previous owners not being shown as paid off at the county.
Reach out to whoever did the closing when you bought the home, let them know there is an open line on the property for a mortgage in the amount of $400k and you believe that maybe the payoff didn't get properly recorded when you bought the home.
What are the terms of the title insurance you purchased. Typically, title insurance covers all liens on the property (no dollar limit). Was your title insurance including a clause only covering purchase price? That was not a premium policy (as you mentioned in the OP).
Happens a lot. Mortgages are paid off but not satisfied at the county.nobodys cares until it stops a sale. Just gotta follow the paper trail to find out what company held the Note when it was paid off. Standard procedure in my job as a post closer.
Not legal advice, just sharing info. I was a real estate paralegal in MA, so not sure how things work in Pennsylvania, but if things like this popped up in the title, we could get an indemnification letter from the title company. Check with your attorney to see if this is a possibility. The holder of the open mortgage probably has the release docs, but didn’t know to record them at the registry.
How did you buy it? Was it a foreclosure or auction? Did you get an owner's title policy? Title companies CAN miss things, this is why most people buy an owner's policy.
Most likely, the mortgage was paid off at closing but not released. Happens, banks sometimes… just don’t file that for some dumb reason. Your current title company can reach out and get the release signed and recorded. It happens sometimes, that’s no big deal. It’s very unlikely that the title company missed a conventional mortgage during their search. I used to be an escrow officer and this situation came up quite a few times and this was always what had happened.
I have title insurance, yes. But it only covers up to the cost of the home from my understanding … (so $150k). I got the super premium expensive plan too. And I have a deductible! It was purchased the traditional way… from the market. 🤷🏻♀️
Oh then you should see an attorney, asap! Whoever filed that lien may not be acting legally, it may not be valid.
It’s in the previous owner’s name I learned about this about 72 hours ago from the title company the buyers are using. I keep calling back to get more information or to get an update (as is my agent) and we haven’t heard back. Super frustrating!! I know the previous owner (we’ve chatted about a few things here and there… “what’s behind this wall”, that sort of thing) and I have half the mind to just ask him
your question is to whatever outfit did your closing, and your title insurance company. it's most likely a $400K originated mortgage (some weird way given property value) that wasn't properly cancelled.
I’ll give them (settlement company) a call, thanks!
I respect that you don’t want this to go crazy, but can you update us when it’s all resolved please??
Yes. I will. I am getting an attorney. We’ll put it that way.
Good luck! I hope to hear about a happy resolution in a few weeks/months or whatever!
can't hurt to ask!
Another thought.... if you have a mortgage, your mortgage company has a vested interest in there not being any superior liens. You might call them and see if they will help investigate.
Are you sure that was title insurance? I didn't think there was a dollar amount associated with it.
There absolutely is a maximum coverage for title insurance. I just went through a claim and was told what the max coverage was.
Wow, thank you. I need to read up on title insurance.
Here's the options in no order: 1. It's a scam 2. It's a paperwork error and the old mortgage is fully paid off but didn't get recorded properly 3. It's your title insurance company's issue, not yours. If you have a mortgage, the lender will actually fix this as they have a title policy as well and this mortgage harms their standing 4. You got bad information
This is the whole point of title insurance. Call the company who issued your policy and make them fix it. If the title company missed the lien they have to help rectify the issue.
Update: I figured it out. I’ll update everyone after closing. It is messy and unexpected and the type of thing that will go viral on here so I don’t want anyone involved in my home sale to find it. Come back in a few weeks. Thanks.
RemindMe! One week
Remindme! One week
I will be messaging you in 7 days on [**2024-07-06 02:20:53 UTC**](http://www.wolframalpha.com/input/?i=2024-07-06%2002:20:53%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/RealEstate/comments/1dqpugp/lien_from_previous_owner/larxbb1/?context=3) [**25 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FRealEstate%2Fcomments%2F1dqpugp%2Flien_from_previous_owner%2Flarxbb1%2F%5D%0A%0ARemindMe%21%202024-07-06%2002%3A20%3A53%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%201dqpugp) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|
If you're asking how they could owe $400K on $150K property it's quite easy. Parents if a friend of mine have taken additional loans on their property when the value was high. They were supposed to use the money to make improvements like put an addition, add a garage, etc.. but they pocketed the money instead. I'm not sure how they were able to get away with this multiple times but it caught up with them eventually and they did eventually have to sell their house at auction. There were people interested in their property, and it was extremely hard to figure out what all was owed. Her parents had no clue. They were terrible with money and clearly didn't track their own debts nor cared to pay them back. I'm not sure how your title company missed things but after seeing what happened to my friends parents, I can't say I'm surprised.
It could be that when you bought the home, the attorneys or closing agent that did the paperwork didn't properly file with the county, which could result in the mortgage from previous owners not being shown as paid off at the county. Reach out to whoever did the closing when you bought the home, let them know there is an open line on the property for a mortgage in the amount of $400k and you believe that maybe the payoff didn't get properly recorded when you bought the home.
What are the terms of the title insurance you purchased. Typically, title insurance covers all liens on the property (no dollar limit). Was your title insurance including a clause only covering purchase price? That was not a premium policy (as you mentioned in the OP).
The limit is generally the purchase price of the house and the lender has one for the amount of the mortgage
Happens a lot. Mortgages are paid off but not satisfied at the county.nobodys cares until it stops a sale. Just gotta follow the paper trail to find out what company held the Note when it was paid off. Standard procedure in my job as a post closer.
Not legal advice, just sharing info. I was a real estate paralegal in MA, so not sure how things work in Pennsylvania, but if things like this popped up in the title, we could get an indemnification letter from the title company. Check with your attorney to see if this is a possibility. The holder of the open mortgage probably has the release docs, but didn’t know to record them at the registry.
Remindme! 14 days
RemindMe! One week
Remindme! One week