Our job as a title company is to pass clear title from the seller to the buyer. To do that we perform an in-depth search on the property. We also do a name search on both parties to the transaction to make sure that there are no outstanding liens against them such as a Federal Tax Lien, Abstracts of Judgment or Child Support Liens. We also run a check in the Judicial Records of the County. If any open matters are found that need to be taken care of we list those items on Schedule C of the commitment. Once the required documents are provided to us, we can clear the lien from the real estate.
Child Support Liens
When parties get divorced and children are involved, normally there will be an order for child support to be paid. If the party responsible for paying the child support fails to pay the designated amount, a child support lien can be filed against that person. If the child support lien is filed of record the title examiner will find it and make a requirement on Schedule C of the commitment for a release of that lien.
Federal Tax Liens
If a party has not paid their Federal taxes and the IRS has filed a Federal Tax Lien against that party in the County Records, that lien will be also be listed on Schedule C of the commitment and a released will be required as well.
In some cases, the property taxes may be delinquent when the seller is trying to sell the property. When this happens, the delinquent taxes must be paid off during closing. The seller can certainly pay the taxes before closing, but we are usually asked to pay them off out of the seller’s proceeds. When there are delinquent taxes on a property, there could be a tax suit pending against it as well. If there is an open suit, all due and owing court cost and penalties are collected as well.
When a contractor does a repair or improvement to a home, they have a certain amount of time to file a lien. For example, say the homeowner has the driveway paved to increase the curb appeal before putting it on the market and doesn’t pay the bill, the buyers could be stuck paying it. The unpaid contractor has up to a few months to file a lien at the county. At closing we have each seller sign the Affidavit of Debts and Liens form. By signing this form, they are swearing that there are no outstanding debts that could attach to the property.
We understand that each real estate transaction has unique situations, please don’t hesitate to reach out to us here at Red River Title Company if you have any questions about your transaction or a potential purchase.