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Can mechanics lien be paid off at closing in the state of Massachusetts?

MassachusettsMechanics Lien

borrower owes contractor and needs cash out refinance to finish project and pay off mechanics lien on construction of residential investment property. Can they obtain title insurance in this instance

1 reply

Jun 18, 2020
Legally, there's nothing stopping a seller from using the cash from a sale to pay off a mechanics lien that was filed against their property. Properties with mechanics liens on them may be sold. However, typically, buyers, their mortgage companies, and their title companies strongly prefer not to engage in transactions with active mechanics liens. But, if a seller can arrange the sale of property with a mechanics lien on it, the seller could then pay off the lien claim with the proceeds of the sale. Levelset discusses selling liened property here: How To Sell Property With a Mechanics Lien. As for the lien claimant - their lien claim will still be effective, even if the property is sold. And, in case there was any doubt, it's probably a bad idea to release the lien based on the sheer promise of payment. Though, there are ways to work with a seller if payment is secured in some other way - like via a promissory note or a personal guarantee. More on alternatives, here: Don’t Want to Use a Mechanics Lien? Here Are 5 Other Options.
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