Legal Question in Real Estate Law in California

Re: Mechanic lien

As the buyer, this is actually not your problem (legally). Practically, however, you will probably have to be involved to make sure it gets resolved. The seller is legally responsible for resolving this. Assuming you signed a standard-form CAR purchase agreement and escrow instructions, the Seller is responsbile for delivering clear title to the property at the close of escrow. Any liens must technically be paid by him to clear them at close of escrow - this means if he has to, he will have to pay it out of his proceeds. Its between he and the HOA to resolve who is actually responsbile for repayment of this amount, but the Seller must close escrow, providing clear title at close within the time limits provided for under your contract. As the buyer, you need to stress to him that he must resolve this immediately, and close escrow within the time frame set forth in the purchase agreement, or you will hold him liable for breach of contract. All the seller has to do is instruct escrow to pay the lien out of his proceeds, and obtain a demand and release from the maintenance company. He can fight with the HOA later about who is responsible. Its just not your problem.

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Re: Mechanic lien

I agree with Mr. Gibbs. A buyer of real estate may demand so-called "marketable title" unless the property is specifically offered and accepted subject to disclosed liens. Title is considered unmarketable if there is any significant lien that will not be removed (paid off) by the seller before or at the closing, or any cloud on title. ("Unmarketable" doesn't literally mean the property can't be sold; it means only that the buyer is not obligated to close unless he waives the defect.

In today's market, there are plenty of places available, especially condos, and unless you really, really want this one, I'd tell the seller to produce "marketable title" on schedule or the deal is off. I would never advise a client to inherit a $40K dispute in the hope that it will go away after closing.

That is, unless the client were getting the property at least $40K below fair market value with clean title. Plus a generous allowance for fees and costs to clear the cloud.