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Can old contractor liens affect new homeowners?

When you are looking for a new home, there are a few options to consider. While the home you and your family end up choosing may be new to you, it may not be new, as in, new construction. People move into previously lived in homes all the time, it's pretty common practice. This is especially true if looking at waterfront property.

However, there is one thing to consider when looking at a preexisting home. That is the fact that things may have happened or affected the previous homeowner that could have repercussions for the new homeowner. While these things aren't always present in the purchase of residential real estate, it is something to consider. Oftentimes issues are disclosed at or prior to closing for the sale of residential real estate, but occasionally the new homeowner are in for a surprise.

This surprise may come in the form of a contractor's lien. A contractor's lien is a claim made by contractors or subcontractors who have performed work on a property, and have not yet been paid. While the previous homeowner may have ordered the work on the property, the new homeowner may be left holding the bill. While it is usually illegal to fail to disclose potential contractor's liens at closing, it occasionally still happens to those who are the new owners of a property.

As one can imagine, this could lead to a residential real estate dispute. Not so much with the contractor or subcontractor. The issue would lie between the new homeowner and the old homeowner who ordered the work done on the property and did not pay the bill. While each situation is unique, state law will dictate how to proceed.

Source: realestate.findlaw.com, "Contractor's Liens," Accessed Jan 8, 2018

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