We’re buying a house over in Adairsville — one of those buy-it-in-less-than-a-week-type deals — which means that for things to move that quickly, everything has to line up just right.
We got the house under contract Sunday, hoping to close it on Friday.
Monday morning, my closing attorney ordered a title search. This is important for two reasons. No. 1, you need to make sure your seller owns the property they’re selling. (You’d be surprised how often the seller doesn’t own what they think they do.) No. 2, you need to ensure there are no outstanding liens against the property.
Our sellers had assured us there were no liens against this property. They told us they’d been to the courthouse three times to confirm it. Imagine our surprise when the title search uncovered a lien from a furniture company.
I forwarded a picture of that lien to the sellers to let them know it had shown up. What happened next was a first for me.
The seller called me up and proceeded to let me have it. I got called all kinds of names, and I was told I didn’t know as much about real estate as I thought I did. They even went on to say they didn’t believe our attorney was a real attorney.
My seller said they’d been down to the courthouse three times to make sure they didn’t have any liens against the property. My suspicions are they only looked in the deed books to make sure there were no security deeds recorded against the property.
A security deed is the document financial intuitions use to let the world know they made a loan to an individual and are using a particular property as collateral. In other words, a recorded security deed puts the public on notice that there’s a mortgage in place and that it must be repaid before the property can be sold with a clear title.
My sellers had a different type of lien against them that wasn’t found in the deed book. To find what they had, you had to look in a different book at the courthouse called the lien index.
The lien they had was called a FIFA, which is short for fieri facias. Try saying that three times fast. CHA, CHA, CHA.
This type of lien is given by the courts after they’ve awarded a creditor a money judgment against an individual at the culmination of a lawsuit. But a FIFA can also happen when someone doesn’t pay their property taxes.
The FIFA states how much is owed and how much interest will be charged until the debt is paid. It also states that anything you own, personal property, real property or even the rights associated with any real property, are now collateral for this debt.
Recall FIFA is short for fieri facias, which is Latin for “make it happen.” That’s because once the FIFA is awarded, the local sheriff has the right to seize any of the above-mentioned collateral and sale it to satisfy the lien – i.e. making it happen.
The sheriff rarely does this, however, so most people, including my sellers, erroneously think that FIFA doesn’t apply to selling their property.
Mark Twain said, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
My sellers knew for sure their property was free and clear. They didn’t like it when I had to tell them the day before closing, “That just ain’t so.” But after going to the courthouse a fourth time, and with some coaching from us on where to look in the lien index, they were able to calm down, and we salvaged the deal.
It’s important to note here that with a FIFA, a lien on me is a lien on everything.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.