Origination ActivitiesQuestion 236 of 400
A title search reveals an unreleased mechanic's lien from a prior contractor. Before closing, what is the appropriate resolution?
a.Ignore it because the buyer is not responsible for the seller's contractors
b.Clear the lien so title can transfer free of that encumbrance, typically via payoff or release at settlement
c.Increase the loan amount to match the lien
d.Order a second appraisal
Explanation
An unreleased lien is a cloud on title that must be cleared before the property can transfer with clear, insurable title. This is typically resolved by paying off and recording a release of the lien at settlement. It is not remedied by a second appraisal or ignoring it.
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