If the title company is turning up a lien it is most likely in the form of a judgment. If the debt has been cancelled there should be some paperwork showing that the debt was cancelled and your attorney should be able to prepare a satisfaction of the judgment to be sent to the creditor for signature. If the bank has cancelled the debt they are obligated to remove the lien. Your attorney should be able to get them to sign the satisfaction or possibly settle the lien for some nominal amount. If not, he can bring a bar claim action to declare the lien invalid. The alternative would be to escrow money (usually double the amount of the lien) until the lien is satisfied or until it expires (ten years after filing if it is a judgment).
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Have your lawyer work with the title company to seek a resolution. If the debt was cancelled, then you need proof that the lien was released or satisfied.
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If I were representing the buyer I would also definitely want the lien released or the amount knocked off the price. This is really not a complicated question and it's up to the seller and their lawyer and the title insurer to contact the creditor and get it resolved-- or pay the difference.
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Regardless of whether you're securing a mortgage, a buyer wants to obtain clean title to a property, otherwise they risk issues transferring themselves later on. As my colleague indicates, if I represented the buyer, I would recommend them doing the same thing. As to the reason it remained in place, you'd have to look to the logistics of how the debt was "cancelled". If the creditor failed to vacate the judgment, then the lien will remain in place. Have your attorney work with the title company to find a resolution.
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