YOU ASK:

Will home owner title insurance pay for liens made by the contractor of my house?

WE ANSWER:

It depends on when the debt that necessitated the lien was incurred. If the contractor's bill was for a job after the policy was made effective, then it is not covered under your standard home owner title insurance policy. However, if the debt was made before the effectiveness of the title, it may be covered under your policy.

There may be instances when you unknowingly buy a house where the contractor is still owed some payments. Or, perhaps the contractor was paid, but the subcontractor that worked for that contractor remains unpaid. If a lien is filed on the house and the courthouse has the updated copies, you can readily see this and clear it up with the seller before you close the real estate transaction.

However, there may be some instances when this does not readily show up in a title search or when the public documents regarding the property are investigated.

For instance, a subcontractor files a mechanic's lien on your house. Somehow the clerk that filed the lien made a mistake and placed it under Lot 72 instead of Lot 27, which was the real address of the house. Thus, when you checked the documents, you or the title searcher was not able to find this problem.

But when the subcontractor is able to get a judgment against the property based on the mechanic's lien he filed, you will have to face the payment of his fees. The title insurance will then kick in to make the payment, subject to the limits stipulated in your policy.

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