The Washington Post has an excellent answer to a reader question in its “Real Estate Matters” section. The reader is purchasing a foreclosure property, and wondered if he could be liable for future liens placed by contractors, since the bank acquired the property by foreclosing on its developer, who may also have left many contractors unpaid.
The buyer could very well be faced with liens from contractors and materials providers who never received proper payment — and, depending on the state laws that apply to your purchase, you may receive no advance notification. While bank liens often trump all other liens on the property (and wipe them out in foreclosure), this isn’t always the case.
Best protection: a good title company and adequate title insurance. For the full article, click here.