Some liens are much easier to overcome, but on the other hand, depending on the lender, the type of lien or even the mere presence of a lien can significantly impact your commitment for financing.
Let’s review some of the different types of liens that commonly come up:
Tax Liens – CRA liens can be a huge problem. A bank may refuse to fund without proof the tax debt is paid (even if there are proceeds in the mortgage to pay the tax debt). In addition, sometimes a tax lien can total more than the equity available in the house. The only saving grace is that if the tax debt exceeds the equity available for financing and your lender is a higher risk lender and not a bank it is possible that you can negotiate a lump sum payment to CRA on behalf of your client for a “postponement” so that they allow your mortgage to go on title in front of their lien.
Construction Liens - A Construction Lien is also known as a Builders' Lien. A Construction Lien is a risk management tool a contractor can use to protect themselves on a job site. This type of lien is typically used when a contractor is not receiving payment on a job or installation that helps to improve the land.
Condo Liens – If a client gets behind on their condo fees or for some other reason owes the condo corporation money and hasn’t paid – the condo corporation can put a lien on the condo. Condo liens can typically be overcome by paying the debt. Condo liens are less impactful to a mortgage closing than a tax lien.
Property Tax Liens – Much like condo liens, property tax liens can be applied when property taxes or water bills are not paid. Unlike tax liens, the likelihood of obtaining a postponement related to property taxes are slim to none and property tax liens can actually supersede the lien related to the first mortgage.
The best way to overcome a lien on a property is to uncover it quickly. You can search encumbrances on a property to learn about liens as well as any other registered encumbrances. Discovering a lien even before your application is submitted to a lender for financing allows us to help you come up with solutions to resolve this issue.
To you this could mean the difference between securing financing or not and can even result in you paying a higher interest rate and cost to borrow.
We go that extra step to investigate your application to ensure a quick and seemless close.
For further information on how to obtain a free property search we can be reached at 1-888-693-1439 or email us at firstname.lastname@example.org
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