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Andrea, Esq.
Andrea, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 12554
Experience:  I have practiced law for 25 yrs. with an emphasis on real estate, business law, criminal defense and family law.
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I put a contract in on a house. In their disclosure (line 40)

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I put a contract in on a house. In their disclosure (line 40) states are you aware of any litigation or lawsuits that may affect this property. They circled no. We'll we got down to closing and an issue came up were there is a lien on the house by multiple parties because the wife is in prison for embezzling money from the bank she worked for. My realtor obtained copies of the lawsuits from the closing company. The attorneys are not clear on who was supposed to get what and now this is dragging out until my rate lock is about to expire and its going to cost me thousands. The other side is acting like they are going to hold me to the contract but if I had known of the possible legal issues I would have never made an offer. Any advise on how to get out of the contract or do I have ground for a lawsuit once the house closed?

Hi, My name is XXXXX XXXXX I will be assisting you.




1. Is your Agreement of Sale contingent on your obtaining a mortgage loan and does it state the maximum interest rate that you would have to accept for such loan ?





2. Why can't the liens be satisfied with the proceeds at settlement ?



Thank you,




Customer: replied 3 years ago.

It is contingent on me obtaining a mortgage loan, I don't know that there is a maximum interest rate that I would have to accept stated in the contract.


Apparently, there is a discrepancy between the attorneys on who gets what portion of the proceeds. I was never aware of a lien. My realtor asked their realtor if there would be any issue with closing due to the legal stuff. She never mentioned a lien to me. She was told verbally there would be no issue. I think she should have got that in writing but didn't. I am wondering if their answering no on the disclosure regarding any lawsuit that may affect the property is grounds for me getting out of the contract.

Hi, Aaron, Thank you for your reply,



1. An Agreement of Sale usually states that the sale is, for example, "contingent on buyer obtaining a purchase money mortgage in the amount of $___________ at a maximum interest rate of __________ %.


So that if your seller drags his feet and your loan commitment from the lender at a certain interest rate expires, and the lender offers you a higher interest rate, you could get out of the Agreement of Sale because you do not have to accept the loan at the higher interest rate;


2. The fact that there are liens on the property does not mean that the property is the subject of litigation. If your seller took out a mortgage loan when he purchased the property, that mortgage would also appear as a lien on the property and would be satisfied at settlement with the sale proceeds.


3. Normally, the Agreement of Sale will state that,


"seller shall convey title to the subject property, free and clear of all mortgages, liens, and other encumbrances, and such as would be insured by any reputable title company"


This obligates the seller to convey title to the property free and clear of all liens, mortgages, and any other encumbrances and if seller is unable to do so, or a title company will not insure your title free and clear and also insure your lender as first mortgagee, then you can rescind the Agreement of Sale on those grounds;


4. As for which party had an obligation to inform you of the liens on the property, it would be the selling broker. However, even if the selling broker did not inform you of these liens, they would have all shown up on the title report issued by the title company which would conduct the closing and which would insist that all the liens be satisfied at settlement before the title company would insure clear title to the property to you.


Therefore, the only possible problem I see is that the seller drags his feet and your Agreement of Sale is silent on the maximum interest rate you would have to accept on your mortgage loan. But, this would be unlikely because Agreements of Sale will not normally leave the maximum acceptable interest blank, there is always a stated maximum. Therefore, if your loan commitment expires and you are offered a higher interest rate, you do not have to go through with the sale and you would inform the seller through the selling broker that their delays have caused your loan commitment to expire and you are, therefore, exercising your right to rescind and cancel the Agreement of Sale. Be sure this is done in writing so that there is no misunderstanding,





Please be kind enough to rate Excellent Service" so that I receive credit for assisting you, it will not cost you anything additional to give me a positive rating, and that is the only way I can receive credit, Thank you for understanding,


Bonus and Positive Feedback on survey is very much appreciated,










Andrea, Esq. and 5 other Real Estate Law Specialists are ready to help you

Hi, Aaron, Thank you for the positive rating, I am always striving to improve the service I give to customers and would appreciate some feedback from you as to what else I could have included in my Answer to you which would have merited a rating of "Excellent Service",


Thank you for your time,



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