I have a lien on a piece of property in California for a specified amount. The property owner believes they owe me a balance that is very different the amount that I have. The property is in escrow. Do they have to pay me what I believe they owe me in order to close on the property.
4 Answers from Attorneys
That depends on the basis for and nature of the lien, and how much of a game of "chicken" you want to play over the amount. A judgement lien is subject to statutory interest, and a modest list of collection expenses, but you have to file paperwork to add those and sometimes even go to a hearing. So it should be a mathematical calculation with little room for dispute as to what is owed. Accordingly, if you won't take it, they can deposit it with the court and get the lien released. If it is a deed of trust, the balance of which is going to be calculated by reference to loan documents, then they cannot as easily get it removed, but you may be subject to civil penalties and even contract and punitive damages if you screw up their transaction because you demanded more than you legally are entitled to, they tendered the right amount and you refused it.
If you can back up what is owed to you, provide it to escrow with your payoff demand. Escrow will not close without being able to pay you. You have to be able to back up your calculation, or you risk liability for screwing up the sale. In other words, be sure you are correct.
I agree with the previous answers, and I think it might be useful to add that the escrow holder may, if no one intercedes, pay you the sum that can be deduced from the public records as owed to you. So, it's pretty important to know what number the escrow holder is looking at, and not necessarily what the property owner believes.
It depends on what kind of lien it is, and the underlying facts. For example, if it is a mechanic's lien, and you never filed a lawsuit to foreclose within the 90 day period after recording, then the lien is void and is simply a cloud on the title that you should release.