#WhyTitleMatters | Contractors Unpaid Lead to Title Liens

Everyone loves the HGTV move-in ready home, right?! It seems to be the trend with younger buyers in this market and with all of the HGTV home makeover shows making it look like anyone should be able to get a newly renovated home for under $200,000 it’s no surprise. Well, what if you closed on a newly renovated or flipped home, only to find out later that the previous owner never paid their contractor for the work?

In a market that has been flooded with seasoned flippers and first-time flippers this can be more common of an issue than you would think. As the new owner of the home, you would then assume responsibility of any mechanic’s title liens against the property. Now we know what you’re thinking, “Well… shouldn’t the person who owned the home previously be responsible for that?” That’s how it should go, right? Well, if a contractor is unpaid for their work they have every right to establish a mechanic’s lien on the title of the property in which they did the work on.

Normally, this sort of thing would be disclosed prior to closing, but from time to time can slip through the cracks if the lien was placed on the property within a grey area period in the transfer process. This is another great example as to why you should always purchase title insurance when closing on one of the biggest investments you’ll make in your lifetime.

If this were to happen to you, your title insurance would kick in and relieve you of any responsibility in paying that debt left to you from the previous owner. Talk about a better nights sleep!

All of our closers are knowledgeable with other scenarios that could arise after closing on a home. Please, reach out to us with any questions that you may have and we hope to see you at the closing table with us soon!