I am looking at buying a foreclosed property I got the title report back today and found out there was a lien on the property and the lien holder was never notified about the foreclosure. What happens to that lien?
1 reply
Oct 23, 2019
First, and assuming this is a mechanics lien, it's worth noting that a Wisconsin mechanics lien must be enforced within 2 years of the date that the lien was filed. So, if a mechanics lien is filed and more than 2 years passes, the mechanics lien will be expired and unenforceable - regardless of what else has gone on with the property, like a foreclosure action.
I'd also like to note that I don't have a lot of experience with Wisconsin lien foreclosures and the fallout that comes afterward. So, for the more clarity there, it may be helpful to consult with a Wisconsin attorney.
Foreclosure and lien basics
With that being said, a foreclosure action will generally erase all liens lower in priority than the lien or mortgage which was foreclosed. So, if the lienholder held a lien that was higher in priority than the lien or mortgage which was foreclosed, then there's a strong chance the lien would remain intact. But, if the lien has lower priority than the lien or mortgage which was foreclosed, then the lien would likely no longer be valid.
Finally, note that if the property was foreclosed in a bankruptcy proceeding (particularly Chapter 13 bankruptcy), then a lien that was present prior to that foreclosure may no longer be valid. After a bankruptcy foreclosure, secured debts are generally paid in order of priority and remaining liens are typically stripped.