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posted: 7/18/2010 12:01 AM

Hush now, liens really do die after two years

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Q. I read your explanation of how liens against your home will die a natural death, but I was given different information by several attorneys. If you wait out the two years, yes, the liens are no longer in effect. But you can't sell your home until you have those liens "quieted" in court by an attorney. You need a clear title. Is this not the case?

A. No. When you say "quieted," you are referring to a Quiet Title action, which is a court procedure commenced for the purpose of removing a lien on a property. This will not be necessary once two years has elapsed from the date work was last performed at the property.

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When you sell your home, the lien will appear on the title report. Obtain a copy of the lien from the title company and point out that two years has elapsed since work was last performed. The date work was last performed is indicated on the lien. The title company should be willing to waive this exception on title based on the running of the two years.

Q. I have been renting a house from a guy for the past three years. The lease is coming up and I am thinking this might be a good time to buy. Unfortunately, there is no way I could get a loan because I was out of work for over 10 months and have just in the last few weeks started working again.

In the want ads, I sometimes see the words "option to buy". What does that mean? I thought it meant that the seller and I agree that I will buy his house in the future for a price that we agree upon today. If I wanted to propose this to the owner of my house, how do I go about this? What other terms would we need to agree on?

A. What you are referring to is a lease/option agreement. A typical lease/option agreement may go something like this: You agree to purchase your landlord's property for $150,000 on or before two years from today. You agree that the rent during that period will be $1,200 per month and $400 of your rent payment each month will be credited to your down payment on the house. In the event you cannot or will not purchase the property within the two years, you lose the $400 per month credit you would have received had you purchased the home.

At the end of two years, you have accumulated a credit in the amount of $9,600 ($400/month x 24 months). You now owe the seller $140,400 ($150,000 less $9,600). If you obtain an 80 percent loan, presuming the property appraises for at least $150,000, you would only need an additional $20,400 to close the deal ($30,000 less $9,600).

Of course, all these terms are negotiable. The amount of time can be shorter or longer and the rent credit can be less or be as much as the entire rent payment. As a general rule, the longer the option period, the greater benefit to you as you would continue to accumulate the credit toward the down payment.

I would suggest contacting a real estate attorney to further investigate your options and draft any agreements you may enter into with your landlord.

•Send your questions to Attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by e-mail to tdr100@hotmail.com or call (847) 359-8983.

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