Bank not removing lien despite cancelling credit card debt

[debodun]

What is the name of your state (only U.S. law)? New York

The sale of a relative's estate has hit a snag. A lien for credit card debt was discovered when the title search was done. Although the debt was subsequently cancelled, the buyers attorney is saying he is still concerned that there is not a clear title since the bank holding the lien, although having cancelled the debt, will not remove the lien. How can this be? The buyer is asking for this amount to be taken off the selling price of the property. I don't see what difference this would make regarding the lien. This is a cash deal and not involving obtaining a mortgage from a bank.

 

[You Are Guilty]

How old is the underlying debt?

Is there an actual lien filed, or is it "just" a lis pedens?

(Why are you against giving the buyer a credit?)

 

[latigo]

How old is the underlying debt?

Is there an actual lien filed, or is it "just" a lis pedens (SIC)? . . . .

Lis "pedens"?

 

[You Are Guilty]

Lis "pedens"?

+N


Sigh.

 

[latigo]

What is the name of your state (only U.S. law)? New York

The sale of a relative's estate has hit a snag. A lien for credit card debt was discovered when the title search was done. Although the debt was subsequently cancelled, the buyers attorney is saying he is still concerned that there is not a clear title since the bank holding the lien, although having cancelled the debt, will not remove the lien. How can this be? The buyer is asking for this amount to be taken off the selling price of the property. I don't see what difference this would make regarding the lien. This is a cash deal and not involving obtaining a mortgage from a bank.

First, there is no such animal as a “lien for a credit card debt”!

Secondly, the only way the delinquent account could have resulted in a lien is because the bank had it reduced to a judgment and then perfected it as a judgment lien in accordance with Section 5203 (a) of New York’s Civil Practice Law and Rules.

In which case it will exist as an enforceable lien against the property for a period of 10 years from the date the judgment was docketed in the county where the property is situated, if not extended in accordance with Section 5203(b) of those Rules.

You are telling us that the debt was “cancelled. But that is not the same as saying that the debt was fully paid and satisfied. Which is the only way the bank could be compelled to release its lien.

So unless there is credible evidence that the judgment has been fully satisfied, or the seller is agreeable to having its side of the ledger debited at closing in order to pay off the judgment, then there is nothing of significance to discuss with the bank.

Also, the buyer’s attorney would be remiss by allowing his or her client to close prior to the lien being removed. And you can be assured that the Title Company is not going to insure marketable title in the buyer until it is released.

 

[latigo]

+N


Sigh.

"N" or no "N" under what circumstances would a "Lis Pendens" be appropriate to a lawsuit to collect an unsecured debt?

Lis Pendens – “A notice filed in the office of public records that the ownership of real property is the subject of a legal controversy and that anyone who purchases it takes it subject to any claims asserted in the action and thereby its value might be diminished.”

 

[debodun]

I asked the estate attorney to clarify the situation to me. This is his reply: "Even though the debt was canceled, the judgment lien was not satisfied of record with the County."

 

[You Are Guilty]

"N" or no "N" under what circumstances would a "Lis Pendens" be appropriate to a lawsuit to collect an unsecured debt?

Really? I have to explain to you that laypeople sometimes use incorrect terms here? In the same thread where you corrected the OP about using an incorrect term?

I asked the estate attorney to clarify the situation to me. This is his reply: "Even though the debt was canceled, the judgment lien was not satisfied of record with the County."

I imagine the more pressing issue is actually whether the cancellation of the debt actually satisfied the lien. (For example, if the debt was cancelled in a Chap 7, I believe the lien still remains). But assuming the lien was/is satisfied, there is a form filed with the county clerk used to strip it away (google: Release of lien of judgment). Getting the necessary signatures on it may prove problematic.

 

[latigo]

Really? I have to explain to you that laypeople sometimes use incorrect terms here? In the same thread where you corrected the OP about using an incorrect term?

Hmm?

Then may I remind that it was you and not the “layperson” that suggested that the “snag” created by the “credit card debt” could be a “Lis Pendens” rather than a “lien” against the property.

And I was simply asking (sans an explanation) why the suggestion inasmuch as the recording of a Lis Pendens in connection with a lawsuit brought to collect the unsecured credit card debt would have no legal purpose or consequence.

But as Woody’s Annie Hall shrugged, “La-di-da, la-di-da”.

 

[debodun]

The attorney says that a satisfaction of the judgment has to be filed with the County before the lien can be expunged. He also indicated that he's "working on it", but the bank is refusing to give satisfaction or even negotiate a settlement. The buyer is now asking that the amount of the lien be taken off the asking price. It has not made that clear to me if the buyer is said he's going to pay the debt. This is confusing me. Why would he ask for this when the payment of the debt is the seller's responsibility?

 

[OHRoadwarrior]

Because the debt remains a liability to the property. If he owns the property, he is responsible for the debt amount.

 

[debodun]

Thanks for that info

 

[debodun]

Buyer is now threatining a lawsuit

The buyer called me directly and is now threatening to sue for breach of contract because the closing, which was to have been 6 weeks ago, has dragged on without a sign of resolution. I refused his offer to sell for $10,000 less than the asking price because of the judgment debt on the property and he is saying he is losing rental income for that time plus the money he has tied up in the escrow down payment. I called the estate attorney and he still maintains that he's still "working on it" (obtaining a satisfaction of judgment), but cannot say how long it will take. Should I be concerned about the lawsuit?

 

[You Are Guilty]

Wait, do I have this right - he is threatening to sue for future rental income from a property he doesn't even own (yet)? If so, let him! You probably won't even need to retain an attorney to get that suit dismissed.

And as much it goes against every rule of Local 666 of the Lawyers Union to do this, may I suggest you explore a compromise with the buyer? Depending on the odds of success of "removing" the lien without paying it, perhaps something like a 50-50 split of the difference would be an acceptable offer.

 

[debodun]

The way I understood the buyer, he is suing for the loss of rental income between when the closing was first scheduled and the present time ( a period of 6 to 7 weeks of which he quoted a price in excess of $1000) plus the money that was used for the down payment (in escrow) to which he did not have access during this time.