hypothetical questions based on a real life property...

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Submitted by UCGal on April 26, 2010 - 10:46am

There's a short sale that was just listed on Friday. (It's someone I've been following in the public databases from an perspective of judgment collection - we're in litigation, which is currently on hold ).

The 'owner' owes at least $175k over the listed short sale price based on NOD/NOT information.

The owner also has various judgments and liens against him from his business. According to the county recorders office he has:
- an absentee judgment on his personal name.
- an absentee judgment (different one) on his corporations name. (The corporation is currently suspended for unpaid taxes according to the SOS's office).
- a tax lien (state) (could be the corporate taxes)
- his wife has a tax lien (state) (separate date - so separate to his tax lien.)

He was scheduled for auction in Feb, then March, ...latest published date is late May.

What happens to the liens if he short sells?
Will he have to come up with the money?
Do the liens follow him or the property?

I know I should know this... but I don't.


Submitted by UCGal on April 26, 2010 - 11:44am.

Ok - I've been googling (always a dangerous move)... I think I've figured it out.

If the home forecloses - since the first mortgage (the one foreclosing) is first in line, all the other liens get wiped out for the next owner... But the creditors/judgment holders could still go after the current owner for the debts that created the liens in the first place. The soon to be former owner is not off the hook... just that the debt is no longer attached to the personal home.

In a short sale - any (or all) of the lien holders could refuse to cooperate - and kill the short sale. Since we're talking about two separate absentee judgments and two separate state tax liens... I'm assuming the short sale is less than likely to go through.

Submitted by SD Attorney on April 26, 2010 - 2:35pm.

UCGal, you are pretty much right on with your google analysis. It sounds like you may have an outstanding judgment against the guy and are worried that you won't get paid when the home forecloses. If you want to discuss please contact me privately.

Submitted by UCGal on April 26, 2010 - 3:52pm.

I don't have a judgment... yet - our arbitration with him just suspended because he didn't pay his half. In the meantime I'm monitoring his status for signs of solvency and enjoying some karmic justice... He really screwed us financially and emotionally. If we can't collect at least I can watch him suffer the consequences of his actions.

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