Title Company ignores lien

What are your options if a property goes through sale and the title company does not notice or fails to act upon a lien for assessments on a property?

I guess my question is they now want us to file the paperwork to release the lien, why should we until they pay....do we have any legal recourse against the title company? It isn't a huge sum, less than $200, but at the same time it is irritating that you file a lien and then have this happen.

This sounds to me like the title company was aware of the lien and chose to ignore it, for whatever reason. Perhaps they didn't think the sum was great enough. Who knows?

I think the issue here is the right of the HOA to assess the lien and the responsibility of the title company to collect it. If that right is not upheld, then it makes all HOAs right to file and collect liens questionable.

First, I would refuse to release the lien until it is paid. That is the condition for release. You might want to check your state laws to see what they have to say regarding HOAs and liens and the requirement that they be settled at closing. But, it may be best to leave that up to a lawyer. Their thinking here may be that it will cost you more to attempt to collect the lien than its worth.

I know it's a small amount, but there is still a basic right that is at issue here. By refusing to release the lien, you send the ball back into the title company's court. Let them sue the association to release the lien. Chances are, given the small amount, your lawyer will convince them to either collect it or pay it themselves to get the lien released. Otherwise, if the HOA gets sued, your HOA D&O insurance should kick in. Anyway, that's my opinion.

This is a tough decision. The cost of paying the attorney vs. the cost if you forget about it.

I would agree with Bruce - there is no way that the lien should be released until it is paid. There is no advantage to the HOA to release the lien, so why should you? In fact, since the lien is against the property and not the person, isn't the new owner technically responsible since they accepted title to the property without it being cleared? If so, then while I probably wouldn't really try to collect from the new owner, I would let them know about the obligation. They might have more influence with the title company than the HOA does.

We had a similar situation that I posted about a while back. An agent for a property that was in foreclosure wanted us to waive the $400 annual assessment so that he could get a clear title and sell the property in a short sale in advance of the sheriff's auction. There was no advantage to us to waive the fees (and several reasons not to), so we denied the request. As far as we were concerned, the agent could pay the fees out of his commission.

Apparently the agent convinced the buyer to accept the debt so that escrow could close. However, the agent also apparently told the buyer that he would only be responsible for the fees from the date that escrow closed until the end of the year. Sorry, but we assess the fees on January 1 for the entire upcoming year. If the buyer takes on the debt, he takes on all of it. Last I heard the buyer was going back to the agent to get him to pay that other part.

You should stick to your guns - the debt still exists and doesn't go away just because the title company screwed up.

Brad, this actually happened to us last year.

Our reply to the title company was to provide, in writing, a statement that we will release the lien when the total due and owing is paid in full.

The agent tried to contact me directly and talk me into releasing it -- but we held firm and within the month we received a check for the amount.

AFTER the check cleared the bank, we processed the lien release.

The purpose of a title company is to insure clear title to the property. They made a mistake and they are liable. I would send a certified letter to the title company with a copy to your insurance commissioner and the buyer. Let the buyer know that there is a cloud on the property they just purchased due to an error of the title company. Then follow up.

Bruse,

You are so right do not release the lien. I disagree going to an attorney which isn't necessary. As I said earlier write the title company and copy the insurance commissioner in your state and I believe the title company will pay for their mistake. It wouldn't hurt to let the buyer know so you will have them informed that they do not have clear title.

Dear Brad: Every state has different rules concerning the states laws go to your atty and make enquireies of him / her.
In Florida we put Liens on Houses and have a system that keeps Title Companies from pulling this nonsense. I am not totally sure about your state but in Florida people are required to have Title Insurance.
Heres how we do it
a. Send them ( The Title Co ) that we refuse to release the Lien without total full payment.
b. If they ignore us we demand from them the name tel and address of there title insurance co and inform them of what there titke co is trying to pull
d. Next if all else fails we allow the new owner to move in and slap a fine on themimmediately. But in Florida the fine must be greater than $1000 to be liened against the property ( Ref Fl House Bill 967 eff 8 July 2008 )
e. We then send the new owners copies of all the letters to there title co along with the names and addresses of there state representatives, a decent lawyer we have used for suit cases.
f. We also recommend that we will give them 30 days to file a suit against the title company before we start adding interest to the Lien. ( Same law allows this now )

Good Luck dont let these lawyers talk you out of what is owed to your HOA ! Run your HOA like a business and you will always be right.
Good Luck

Florida Statute 720 is the LAW. Not a House bill that has not become law.
The florida legislature did not revise fs 720 . The Govenor did sign a new Condo law.
When the title company requests assessment data on a proposed sale, indicate to them ALL ammounts due the association. The title company will not close on a clouded title unless there is a release by the party who is owed.

I know that . We are on the same page Bruce.