Any Advice on how to negotiate mechanics liens for a Short Sale

Foreclosures, Short Sales, Tax Foreclosures
1

I’d need some advice on strategies for negotiating 2nd & 3rd mechanic liens totaling $23,000 for a $350,000 Short Sale? Does anyone have a particular strategy or advice? I know that I can tell them that the property is facing foreclosure & they’ll get nothing if it goes to auction. I’m looking more for some practical negotiating nuggets. -Thanks

2

These liens can go one of two ways. Really easy or harder then the banks. You are right in your thinking that yes they will get Nothing if the property does foreclose. Yet some people are so bullheaded that they don’t care. They would rather let the property go under then to take a dime under there lien price. I always start out asking if they are in the Real Estate business. you will get a no 99% of the time. That is when you go into educating them and letting them know how the process works. Then I will send them documents that prove my case. I also inform them that not only is the property going into foreclosure they are also considering BK as a option to get out of there debt so they are better getting off the deed and releasing the lien and letting them file the BK so they can use it as a tax write off then to go forward with the foreclosure. Also if the Home Owner will sign an agreement to pay monthly payments if they will release the lien at that time the will feel better about the situation and allow that. Then when the people file the BK it will allow them to use it as a tax write off. This is not a easy thing with some Mechanic lien holders. There are a few other ways to get them done as well.

3

Good to meet you

Good advice Summit…

I would try three different approaches…

  1. call the lien holder and see if it for sale knowing that the property is foreclosure…

  2. If not for sale at a price I am comfortable with, then let the short lender dictate what you can pay underlying liens… Let the lien holder know that it isnt up to you, the borrower and not the them… Its the banks fault…

  3. find out if the lien is valid… Has the time ran out for them to enforce their lien. In california they have 90 days to bring an action of foreclosure for the lien to be valid…If the lien holder isnt a licensed contractor the lien is invalid in California.

Good house hunting

Michael

4

thanks Mr MichaelQuarles. you three different approach helped

5

be careful on how you approach them and make sure they know that the sellers are not getting anything ($$) as result of the sale. Having them understand that the house is very likely to go to auction (explain the situation, what is owed, how much its worth), and that you could also wait and buy later when the lein would be removed and you would only have to deal with one party - but you rather have the chance to buy now and at least the would be getting something for their work. Again, if you divulge the #s of the deal, they will be more likely to work with you as they might not have an idea about the value and might think they can still get paid. SHOWING THEM THEY WON’T will be a huge advantage in them accepting something.

6

MQ is right.

In Texas if they don’t revive their liens in 2 years, it’s no longer valid. You may not even really have to deal with it at that point.

Keep in mind however, that you may have to point to that particular statute when dealing with your Title companies. I’ve had to do that before becuase they’re watching their own backs and try to get releases on everything even ones that may not be valid.

I would check on the validity first, because if they’re no longer valid and you let them know you’re interested in it, they may refile on the lien.

Dennis

PS Let us know how it goes