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He assumed he would have to put some money into it, but not the millions the fine print said they would need to invest to bring it up to a livable standard - which required a ton of construction, electrical and plumbing as a starter. He kind of scoffed at it once he started learning all of the details.
I also remember seeing the same thing when entire blocks of houses were being sold during the housing crash after 2008. Majority of the houses were in really bad neighborhoods (the ads for houses in Detroit were eye opening) or conversely way TF out in never never land where some developer decided to build some neighborhood development that went belly up after the crash and was stuck with half finished houses and no way to pay to get them finished.
My (now ex) wife was against buying it because we had not bought a home for ourselves yet, and even trying to explain that we could buy it, live in one side, rent the other for the full cost of the mortgage and then some was not enough to convince her, so I let it slide as no amount of money was worth the never-ending argument that it would have caused.
That duplex is worth about $450k now, and if I had gone through with it it would have generated a conservative $200k in rent income in the meantime.
If I had known the relationship would have been over in less than 5 years from that point, I probably would have bought it anyway, but at the time my mentality was "happy wife, happy life", naively thinking that there was a way to make someone happy who refused to be happy.
Maybe the restoration would have been a (or another) point of friction, and perhaps the project would not have gone well because of it. You could have sold for breakeven, or less. Then you (and/or she) would have blamed that as the reason things went south.
Or it could have gone well and you could have lost your share in a divorce.
I don't really have a point ... maybe, bygones and all ...
The Duplex: the perfect property for divorce settlements!
There was an episode of Fixer Upper where Chip and Joanna helped their carpenter buy a house for 15K. The neighborhood was dystopian. Presumably people were using the house for shooting practice as its one side was entirely bullet riddled.
How does it work in the US? Are taxes on the property itself? This feels weird. I would have thought that the property can only be sold if everything is OK with it (no litigation, liens, etc), and taxes are owed by persons? Is it different over there?
This could vary by jurisdiction, but as I understand it, taxes and liens are attached to the property itself. "Clean title" can be a contingency of offer: buyer can back out and get back their earnest money (aka deposit) if the property has liens/encumbrances that are not written down in the sales contract (example clause at the link at the end). When you buy the place, you get title insurance, often mandated by your mortgage lender. The title insurance company does a title search on the property to find liens and owed money on the property and then sells you an insurance policy saying that they'll make it right if they missed anything during their search. This is because your mortgage lender never wants to be second in line to get their hands on the property to recoup in case you default on your mortgage. Liens on the property should be easy to find because they're supposed to be registered with the local municipality: maybe the city you're in, maybe the county, maybe the state, idk I think it depends. In practice, maybe some roofer/plumber/landscaper forgot to do that and now you have a problem you didn't know you had. That's what the insurance is for. The property _status_ is not knowable so much as the _status transitions_ are knowable: when was a lien attached or removed from the property, so that's why it involves a private company looking it up. You'd think it'd be a public good, but it's not. Odd.
As an example: when I bought my current place, the previous owner was financing the furnace which included free annual service from the installer. He wanted us to take over the payments. We asked him to convey without encumbrances, meaning pay off the balance with the furnace company before we'd close on the house. If he had refused, we could have backed out of the sale because our offer said that we were only willing to buy without owing anyone anything.
Seems to me like this should be the contractor's problem. If they did the job 2 weeks ago fine, but if they come along 6+ months later after the house is sold demanding payment from the new owner that seems ridiculous to me. Surely if these Liens are supposed to be public there needs to be a requirement that they are registered as soon as possible.
Otherwise it seems to me like this is a ripe opportunity for scams. Buy house, have contractors refurbish it, sell it for a much higher value, then the contractors register their debts and now the new buyers or their insurance is on the hook for the refurbishment.
This is called ‘fraud’, it is already illegal.
Mechanic’s liens are good and necessary for customers like the current US President who fail to pay their contractors.
If they try to register their lien once the owner of the vehicle has changed, it can not be accepted. You can't secure debt with a vehicle you no longer own. The lender needs to make sure the person owns the car and register the debt while they still own the car. And if they sell the car then they have money to pay the debt, and since they no longer own the car then their debt is no longer secured so that should trigger a requirement to pay the debt per the loan contract. Debt should be owned by people not objects.
The whole concept of debt that's attached to objects is silly. It can make sense in certain situations like a housing association that's taking up a shared loan and paying it down as part of shared monthly expenses, but for a car repair or similar it makes no sense. The person who takes the debt is responsible for the debt. If they sell the car then they pay the debt with the money from the sale, if the sale doesn't cover the debt then they still owe the rest.
It does not need to be any more complicated than this. In order for anyone to take over responsibility for debt in relation to a purchase, there needs to be explicit written and signed consent. So - I can buy a house including some debt if I know and agree to it, but I can't unwittingly buy a landmine. If the owner fails to resolve their debts when they sell that should be their problem not the buyer's. It's up to the bank to collect their debts from the person they have a contract with.
This is true in practice with houses, not in theory. Here's an example (differs by jurisdiction) of how the deadlines work for filing a lien: https://www.levelset.com/payment-help/question/can-we-lien-a.... The title search should include "are the sellers the defendants in a lawsuit wherein if they lose, the judgment results in a lien on the property." We actually went under contract on a house where the owner's name matched someone in bankruptcy and triggered this. We knew the guys were different (ages, addresses) but our mortgage lender needed the title company to figure out their mistake first. So the lien attaching to a house that sells in the meantime is a really extraordinary circumstance: closings usually take 30 days so what are the odds that something gets filed in that meantime without already being underway? If the lien does attach to the house, then the buyer would have a tort against the seller for putting them on the hook, but the mechanic would have a backstop for getting paid in the form of the lien. The buyer could get a judgment against the seller. But that'll all be handled by the title insurance if it ever comes to that.
> The person who takes the debt is responsible for the debt. If they sell the car then they pay the debt with the money from the sale, if the sale doesn't cover the debt then they still owe the rest.
This is how it really works in practice. The mortgage company won't let you buy the house with the liens still attached. The debts will get paid out of the purchase price of the house. Who gets paid what out of the sale price is already determined before the actual closing date, and the mortgage company writes separate checks to everyone who needs to get paid (I think). The insurance is there in case something very out of the ordinary happens. Even the cost of paying someone to figure out who gets what is part of that insurance policy (again, I think).
> If the owner fails to resolve their debts when they sell that should be their problem not the buyer's.
It effectively is. The title search before the closing reveals all of this and pauses the sales process. Nothing proceeds until they come up with a plan to pay it off. The insurance is only for extraordinary circumstances where someone messed up the recording of the lien.
> There needs to be a system for registering and searching liens, it needs to be publicly accessible and the lien needs to be registered before it's valid.
This would be the best. I'd love it if it were federal so you just had to search one thing. Bankruptcy is federal, so why not this? Even better: if the system could record the house going under contract. You're a roofer who's been lazy suing somebody. Every Monday you upload the CSV of addresses that owe you money. One of those days, you see "this house is now under contract and you have 5 days until the window to register lawsuits against the sellers closes" You call your lawyer and tell them to start the lawsuit for the unpaid debt. Sellers and buyers get notified that the title isn't clear and there's a suit worth $X to work out.
This then produces the problem of people monitoring every address in their town and threatening the parties to the sale with a baseless lawsuit in order to pause the sale. You may have to bring back corporal punishment to stop such individuals. Hmm. Much to consider.
> [..] generally, when a mechanics lien is filed after the sale of the property, a mechanics lien may still be able to attach to the project property as long as the other requirements for the lien claim were still followed.
Just why? The whole point of a lien is to be able to sell the house to raise money to pay the debt. The house is sold so now he can pay the debt. If he had so many debts that he's still underwater then the lien wouldn't have made a difference anyway, as the older debts would have to be paid first.
The way I understand this, the homeowner entered a contract with a mechanic allowing the mechanic to put a lien on the property to secure the debt for the mechanic's work. Then he sold the property before they did so. It seems to me there are now a couple reasonable courses of action:
Force the homeowner to pay the debt as it is no longer secured, or they could offer up something else as collateral for the debt.
It makes no sense to make the new homeowners pay for the repairs for some stranger's car. That's just wrong. The only way it could possibly make sense is if they explicitly agreed to take over the debt as part of the sale. Clearly this isn't how it works in the real world, I'm just baffled at how stupid the real world is. This seems so easy to fix. The only explanation I can come up with is the insurance companies lobby to keep it this way because they make a fortune selling title insurance that doesn't even need to exist.
This is because all lenders require title insurance as a requirement for receiving the loan monies. So for almost all buyers they have no choice, their bank/credit union that is actually putting up most of the money forces it upon them.
Easements can be a huge headache too e.g. some utility may have an easement to come on your property at any time and do a whole list of activities to maintain a pipeline, or power line, or what have you.
I find mineral rights interesting. You can own some land, say 20 acres, and then discover something valuable under it like oil but then it turns out the rights to that oil are owned by someone else. Further the owner of those mineral rights can drill on the surface of the land, which you own, without your permission.
The oligarchs always win.
Here's a general map of how it works, by state: https://www.secretsoftaxlieninvesting.com/tax-sale-map
In general, when it's sold as a deed, and sometimes as a redemption deed, non-government liens on the property are forfeit, and it clears out the taxes owed by the government entity selling it, but it doesn't clear out other government liens, e.g. when a property is sold to pay county property tax, the federal government could have a lien on it for income tax owed by the same owner, and the county could have a lien on it for sidewalk repair, and a mortgage company could have a lien for a loan. The mortgage company would be unable to collect anything, the federal tax lien would likely allow the government to force you to sell it to them for what you paid for it, but they wouldn't be entitled to collect from you, because it's the previous owner who pays taxes, but you could still be required to pay the county lien for sidewalk, plus penalties accrued since the previous owners non payment started, because you now own that property and its sidewalk.
It needs to be torn down and rebuilt. It's not a large plot. It doesn't seem to be in an attractive location. For all we know the water is undrinkable. I suspect its true value is negative.
Transit agency tried to expropriate for a train station at market value: ie $0.
Looks like it got settled out of court: https://canliiconnects.org/en/commentaries/88178