Subordinate Lienholders

I am working some short sales with numerous mechanics liens and was just curious of others experiences in what to offer these lienholders as a percentage of the amount of the lien.

Some of the liens range in amounts from $1000 to as much as $40,000

The auction is in a short few weeks

I know this is a somewhat difficult question to answer, as each situation is unique unto itself

I expect some might answer it's up to what the bank would allow, however put that to the side for the moment and share your thoughts or better yet real life experiences regarding this topic.

Thanks

Have you had a title search done and know that the liens attach? In FL the liens must first be certified and then they only attach for one year. After that they must rerecord them.

Yes I have a Prelim and the liens are recorded against the property, they will get wiped if the property goes to auction,
The goal is to obtain lien wavers from the lienholders so the sale can take place and avoid the auction

[ Edited by reweb on Date 04/03/2008 ]

I won't take a case on if it has more than three liens - it's just too difficult and time consuming.

Begin by offering 1k, then work up. I usually refrain from offering more than 10% - that's my cap.

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this process varies greatly from state to state. Make sure you understand the process.

Explain to the lienhold that they are going to get wiped out in a couple weeks and something is better than nothing.

You need to research the exact situation and position the lien or subordinate mortgage is in.... Position as 2nd, 3rd, 4th, etc.....who is in front vs liquidation value of the property, etc.

I have earned $18K fron a $25K I lien I bought for $1K.

I have barely broke even on a few.

Each one is different. Negotiate to buy it for a nominal sum, then if you buy it.... max out your advantage...whatever it may be. [addsig]

If your area is like the ones that i do business in SOME not all Jr. Lien holders are jerks.. Them knowing that they maybe wiped at the sale is a great motivator for Jr's.. although if you personally pay these liens off i would ask for an assignment of the lien and maybe get paid half or full at escrow....but thats just my 2cents

Check your statutes on liens. In my state, Mechanics Liens expire after one year. Though they can be renewed, that might be difficult if title has changed, and not that many contractors are savvy to the process of renewal anyway. It's also unlikely any would try to foreclose to collect their lien, though if you bought one, you could (Joe Kaiser has a whole course about that).