Escrow & Title
A buyer who receives a title report showing an unresolved mechanic's lien from the previous owner should:
AProceed with the purchase and hope the lien will expire
BRequire the seller to resolve the lien before or at closing✓ Correct
CAccept the lien as part of the purchase
DFile a complaint with AREC
Explanation
Unresolved liens are clouds on title that the seller must resolve before conveying clear title to the buyer — typically requiring payoff and a recorded lien release.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
State-Specific Concepts
Mechanic's LienAREC Regulation
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