Sellers financial obligation

[patrick4287]

I purchased a property including a house and 7 acres. The previous owner contracted to sell timber from his land as he was needing money. He was paid by the lumber mill for a certain amount of timber, some of which was taken. He told the lumber company that once the house sells the new owners would assume financial obligations to pay back funds to the lumber mill. They did take some lumber from the property, but vacated the property before taking what was contracted, knowing the seller was near foreclosure.

We as buyers refused to take on this financial responsiblity and proceeded to closing. Closing was finalized, no clouds, and clear title was issued. Now 8 months after closing the lumber mill is demanding their money from me. Since I did not enter into any contract with the lumber mill, are there any obligations on my part, or since the closing was completed is this matter closed?

Thank you

[Cedar City Utah Realtor]

This is why we buy title insurance, I would call the title company and explain that they told you they give you a clear title when infact there were clouds on the title.. Something is fishy here though you said "We as buyers refused to take on this financial responsiblity and proceeded to closing. Closing was finalized, no clouds, and clear title was issued." If you were given a clear title then the lumber company put a lien against your property after you owned it. Which doesnt sound right because you already state that you know about the financial responsiblity. Anyways in a nut shell you need real legal advise from an attorney.

[patrick4287]

Cedar City.

It should be made clear that there were no clouds on the title, nor has the lumber company placed a lien on the property before or since the closing. My questions is asking do I have any obligations to a deal made with the previous owner refernece this timber?

I am assuming that at the closing if this matter was still on the burner, then it would have been handled at the closing. The title company's report shows that the seller had a judgement in 1996 and back taxes plus interest and penalties for 4 years. All of which was paid by Citibank who had filed a foreclosure with the seller. The date of the hearing on foreclosure was March 30, 2005, and we closed on the property on April 11, 2005. I discussed with the closing attorney who basically said that it was the first time he had heard of this situation; the listing agent did not mention it; and the owner along with his bank did not bring it up. At the closing Citibank was present and their settlement charges included his judgement and back taxes and a few other items needing to be settled.

I just wanted a opinion about my rights and obligations.

[Chief Tutor]

It has been a few years since I was in real estate and title issues vary by state, however, if the title was issued free and clear and you have title insurance, then the demand from the lumber company is the responsibility of the title company. They issued a clean title and you were not aware of any liens etc... therefore, it is their responsibility.

They may try to tell you that you or the seller was negligent during the closing process however, if you were not aware of any ongoing issues and you did your own due diligence in addition, then you should not be liable in any way.

You may be required to provide documentation showing you were not negligent, however, other than a sworn statement to this fact, this should not cost your any money.

Just my two cents,

[Cedar City Utah Realtor]

Ya but he was aware of it. Read his first post. This is why i said something was fishy. He said "We as buyers refused to take on this financial responsiblity and proceeded to closing." This is why i say he needs real legal advise not the kind you get in realestateforums. He may have been negligent and may get stuck with the debt.

[Chief Tutor]

Good point and I agree that legal advice is more important than what we say in the forum. However, if a title company issued a clean title, it should be on their shoulders regardless. Isn't that why we buy title insurance. To protect ourselves from ourselves? :D

[HMiller]

Professional legal advice is definately in order. The best advice is to consult with your real estate attorney.

[Cedar City Utah Realtor]

I agree with you he was issued clear title he is probably ok. I am kinda wondering if he really was issued a clear title or if we are only getting half the story or whatever. Like everyone has already said. As great as the ppl are on this forum they are no substitute for an actual attorney.

[patrick4287]

To cite the issue one more time. I am the buyer. The seller made a contract with a lumber mill to sell lumber from his property when he knew that a foreclosure was pending and evenutally was filed.

We (buyers) made an offer to the financial insitution to purchase the property. The seller told the lumber company the new buyer would pay back the debt as the lumber mill paid for a certain amount of timber, but did not finish because of the foreclosure leaving a balance owed.

At the closing was an attorney, the seller, we as the buyers and the agents involved. The closing was finished, title insurance issued, and the deed was deemed clear and free of all liens, chattel mortgages, and other debts.

Now 8 months later the lumber mill called me in an effort to collect the remaining balance of monies paid to the seller of the property. I feel it is a matter between ther seller and the lumber company. I talked to the original real estate attorney who states this was the first he had heard of this situation and if they had a claim of a debt it should have been brought to closing where the financial institution who filed the foreclosure and a judgement against the seller would have paid the debt from the sellers settlement charges.

And yes the title is free and clear! As of November 23, 2005 we as buyers refinanced the property at a lower rate and a better fixed term. At the time of that closing the deed was free and clear and nothing outstanding was noted on the title search.

Just want an opinion from anyone who knows if there is something I need to worry about, or was the matter closed at closing?

[Cedar City Utah Realtor]

Tell the title company and attorney. Let them deal with it.