How to clear a mysterious lien when trying to sell a home

As featured in The Washington Post

I’m trying to help an elderly friend sell his property in Pennsylvania. The title search shows a lien that he does not remember; in any case, it should have been paid off in 2013.

The original bank that lent the money no longer exists, and the mortgage was sold several times over the years. The last known bank cannot find any trace of the lien. How do we go about clearing this lien from the title at the courthouse? Do we have to find the current/latest mortgagor? Do you have any other ideas?

Over the years, Sam has had real estate clients who don’t recognize old loans on title. This is usually because their loan was made with Bank A, and in the intervening years, Bank A was sold several times or changed its name or went out of business and was absorbed by Bank B, which was later absorbed by Bank C.

So, when they look at title, they see a lender name that is completely unfamiliar, especially if they refinanced frequently or have owned several different properties over the year.

With this in mind, the first thing to do is to help your friend “remember” whether he had a loan on the property and with which lender. You can then use the Internet to track back whether the lender listed on his title is, in fact, the same lender.

Assuming it is the same lender and the lender is now out of business, you may need to help your friend find his documentations from the loan and collect other proof that he has paid off the note. That proof may be a document that releases the lien that was sent to your friend but never recorded.

Another issue we frequently see is a mortgage from a prior owner that was never released and continues to show up on title.

So, let’s say your friend purchased the home some 30-plus years ago and the prior owners had a mortgage. If your friend obtained title insurance at that time, the title company that issued the title insurance policy should back up that policy (even 30-plus years later, assuming they’re still in business) and make sure that any future sale goes smoothly.