Should I do a credit check?

Hi there. I am planning on entering into a land contract and wanted to get some advice. I was told by a friend that I should pull the seller’s credit in case their are loans taken out by them using the property in question as collateral. And these kind of liens wouldn’t show up on a title search. Does this sound right?

Any input on the subject would be greatly appreciated,

If the property is pledged as collateral for any loans, they should show as ecumbrances on the title…they should, in fact, show up on the title search.


Ok. In this particular situation, my tenant’s home has been sitting vacant for awhile due to settlement issues in her divorce. AT this time, this property is still in her and her husband’s name. What happens if say, her husband went out and obtained a loan in the process of the divorce, used their home as colateral, I make a land contract for the property and he defaults on the loan. Who’s responsibility would this be?

Oh yeah…what is an encumbrence by the way?

Encumbrance = any right to or interest in land that affects its value, including mortgage loans, unpaid taxes, easements, junior liens, or deed restrictions (from the REI Club Investing Glossary)…in this case a junior lien on the property.


Oh ok. Thanks. Appreciate it. I will check out that glossary.