Can I turn my construction loan into a permanent loan if there is a mechanical lien against my property? The GC is willing to bond the lien ( in escrow) with my title company.
1 reply
Jan 28, 2020
Ultimately, that would be up to the lender. Mechanics liens don't strictly prevent loans, sales, transfers, etc. from happening. But, generally, most purchasers and lenders prefer to deal with properties that don't have any mechanics liens against them - particularly recent and active ones.
Of course, there are a number of ways to help resolve a lien issue in order to move forward with a loan or sale. And, as you mention above, bonding off a mechanics lien is one of the potential options. When a lien is bonded off, it will free up the property title, and that should go a long way for calming the nerves of a potential purchaser or lender. Then, the owner and lien claimant could resolve the issue without the title being an issue. But, whether or not bonding off a lien will be sufficient to make a lender comfortable is up to that lender, and it'd be a good idea to discuss the matter with them before proceeding in one way or another.
For more information on bonding off liens: Primer on Mechanics Lien Bonds and Bonding Off a Mechanics Lien.