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What can I do about my junior lien being ignored in a short sale?

My IL company had a junior lien against a property. Later the property was sold in a short sale without addressing our lien. Title company admits they missed lien, but won’t pay. Because they say there was no money left for us. Can they do that? Is our lien now the superior? Or are we subordinate to the new bank? Thank you!

1 reply

Nov 11, 2019

Secondary liens usually throw a wrench in the short sale process, and the mortgage or first-lien holder who's working with the owner to sell the property must generally clear the property of secondary liens before it can be sold. If secondary liens aren't cleared up before the property is sold - that should create some headaches for everyone involved. Unfortunately, I'm not particularly familiar with how a property transfer under short sale in Illinois. Conceivably, if a secondary lienholder did not agree to release their lien to facilitate the short sale, that lien should still be intact. After all, the primary lienholder in a short sale is voluntarily releasing their lien claim. So, unless a secondary lienholder has agreed to go along, their lien shouldn't be affected by a separate lienholder's decision to release their lien. But again - this is a bit of speculation since this question is a bit outside of my area of expertise. It would be helpful to discuss the matter with a local Illinois real estate attorney - they'll likely have more insight on where the secondary lien stands and how best to collect payment moving forward.

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