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Should I be worried about "identify theft" for a "real property" (i.e. house)

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Cliff-notes Background:
1. Purchased a house from a guy this February. Very nice, decent guy. He was a programmer (which I consider myself to be as well) for a big insurance company - so was very easy communicating with him and no drama.
2. Turns out, the owner before him (owned the house from 2006-2012) had presidential habits - defaulting on contractors, IRS, inciting lawsuits left and right, leaving enraged customers in his wake and so on.
3. At the time of closing the house, the previous owner had to spend $500 swatting a $26k IRS lien in the name of the owner before him that got attached to the house. At that time, I just thought "poor guy - he is losing $70k on this house in 4 years and now this" and did not pay much more attention to it.

Fast forward to now - I have a persistent irritant in the form of spam mail. Yesterday, for example, I got a letter sent to my address addressed to a business named "Bedbugs Be Gone". From the look of it - it seemed to be yet another collection notice from our State's department of revenue (i.e. State version of IRS). This is not one off. Every day, there would be something like this. I have spoken with my mailman. I just leave them at the back of my mailbox and take my mail. He picks them up next day and returns undelivered.

At the last count - apparently there are 23 different businesses at my address. 

So far, so good. No issues. At least nothing that bothers me too much.

I'm worried, however, if there are things like "mechanic's lien", or some other thing that can come back to cause me harm due to some activities of this con-man of a previous owner. Hence summoning the collective wisdom of the Finance forum to see if there is something I "should" be worried, and/or take any proactive steps about.

State is CT.

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Stuff described by OP is incredible nuisance, but monetary loss presumably covered by title insurance.

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I wonder if you could change your house number... no idea if that's possible but it might be a solution.

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puddonhead said:   I'm worried, however, if there are things like "mechanic's lien", or some other thing that can come back to cause me harm due to some activities of this con-man of a previous owner. 

As long as you have title insurance there should be nothing to worry about.

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Go to your physical post office and file a change of address with "Moved, no left no forwarding address" for any all combinations of the mail you get.

You can't do this type of change of Address online. Must be done in person.

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If there was a lien, you wouldnt have been able to transfer the title without first settling debt.  Now, it's too late for them to file a lien on the property involving a previous owner.  Rather, in theory they could file a lien against the prior owner's title, but it would be secondary to your first-position "lien" (the transfer), after which there's nothing left for secondary liens to collect.  The only thing that could go bad for you is if the title search missed an existing lien, in which case the title company should take responsibility for clearing it up.

You probably should be hoping someone tries to file a new lien against your property for someone else's old debts.  Either it'll be quickly removed as a mistake, or you'd be in line to collect some damages.

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atikovi said:   
puddonhead said:   I'm worried, however, if there are things like "mechanic's lien", or some other thing that can come back to cause me harm due to some activities of this con-man of a previous owner. 

As long as you have title insurance there should be nothing to worry about.

  that is only property

how about personal?  

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Stubtify said:   Go to your physical post office and file a change of address with "Moved, no left no forwarding address" for any all combinations of the mail you get.

You can't do this type of change of Address online. Must be done in person.

Do this and some of your own mail is likely to get returned to sender as well.  I wouldn't advise filing any kind of forward or change of address order.

Simply write "Return to sender.  Addressee no longer at this address" across the front of any mail that isn't yours and leave it in your mailbox. 

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puddonhead said:   Cliff-notes Background:
1. Purchased a house from a guy this February. Very nice, decent guy. He was a programmer (which I consider myself to be as well) for a big insurance company - so was very easy communicating with him and no drama.
2. Turns out, the owner before him (owned the house from 2006-2012) had presidential habits - defaulting on contractors, IRS, inciting lawsuits left and right, leaving enraged customers in his wake and so on.
3. At the time of closing the house, the previous owner had to spend $500 swatting a $26k IRS lien in the name of the owner before him that got attached to the house. At that time, I just thought "poor guy - he is losing $70k on this house in 4 years and now this" and did not pay much more attention to it.

Fast forward to now - I have a persistent irritant in the form of spam mail. Yesterday, for example, I got a letter sent to my address addressed to a business named "Bedbugs Be Gone". From the look of it - it seemed to be yet another collection notice from our State's department of revenue (i.e. State version of IRS). This is not one off. Every day, there would be something like this. I have spoken with my mailman. I just leave them at the back of my mailbox and take my mail. He picks them up next day and returns undelivered.

At the last count - apparently there are 23 different businesses at my address. 

So far, so good. No issues. At least nothing that bothers me too much.

I'm worried, however, if there are things like "mechanic's lien", or some other thing that can come back to cause me harm due to some activities of this con-man of a previous owner. Hence summoning the collective wisdom of the Finance forum to see if there is something I "should" be worried, and/or take any proactive steps about.

State is CT.

  
So... did you get title insurance?  

If you had a lawyer at closing, he should have facilitated the title search and confirmed no liens.  He can also tell you more about your title insurance.

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Agree with other posters who point to title insurance as the backstop to any potential trouble for OP.  Hope OP bought it.

One thing, though, about title insurance:  absent updating it is essentially a wasting asset in a rising price environment.

This is not a consideration today for OP because he states home purchase was in February.  So to use an extreme example:

You buy home today for $x and discover a title defect in 2027, at which time value of home is $2x.  Are you covered?  Yes.  But only for $x.

Takeaway for OP:  get to the bottom of whatever is happening to you.  Passage of time is not necessarily your friend in this matter.  If there is a problem with your title you want to discover it sooner rather than later.  Alternatively relax and enjoy life, but be fully prepared as you go along year after year, especially in your vexing situation, to keep your title insurance up to snuff.  Here is a reference:

Title insurance updating 

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shinobi1 said:   Agree with other posters who point to title insurance as the backstop to any potential trouble for OP.  Hope OP bought it.

One thing, though, about title insurance:  absent updating it is essentially a wasting asset in a rising price environment.

This is not a consideration today for OP because he states home purchase was in February.  So to use an extreme example:

You buy home today for $x and discover a title defect in 2027, at which time value of home is $2x.  Are you covered?  Yes.  But only for $x.

Takeaway for OP:  get to the bottom of whatever is happening to you.  Passage of time is not necessarily your friend in this matter.  If there is a problem with your title you want to discover it sooner rather than later.  Alternatively relax and enjoy life, but be fully prepared as you go along year after year, especially in your vexing situation, to keep your title insurance up to snuff.  Here is a reference:

Title insurance updating

  How common is it for issues to crop up after a year or two? In this case, it would be even longer because the previous owner bought it in 2006.

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I did get title insurance through the lawyer.

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Isn't title insurance mandatory in all US states anyway?

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beatme said:   
shinobi1 said:   Agree with other posters who point to title insurance as the backstop to any potential trouble for OP.  Hope OP bought it.

One thing, though, about title insurance:  absent updating it is essentially a wasting asset in a rising price environment.

This is not a consideration today for OP because he states home purchase was in February.  So to use an extreme example:

You buy home today for $x and discover a title defect in 2027, at which time value of home is $2x.  Are you covered?  Yes.  But only for $x.

Takeaway for OP:  get to the bottom of whatever is happening to you.  Passage of time is not necessarily your friend in this matter.  If there is a problem with your title you want to discover it sooner rather than later.  Alternatively relax and enjoy life, but be fully prepared as you go along year after year, especially in your vexing situation, to keep your title insurance up to snuff.  Here is a reference:

Title insurance updating

  How common is it for issues to crop up after a year or two? In this case, it would be even longer because the previous owner bought it in 2006.

  
Title issues of any nature are not commonplace, not everyday happenings.  But if it happens to you without insurance it becomes a black swan situation for you.

As for impact of time's passage, refer to the link I provided.  It can be MANY years before some problems surface.  I speak on this from personal experience.

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fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
  
Dunno the answer to that.  But can say for certain there is no requirement to keep it updated.  That is strictly up to the individual homeowner.

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shinobi1 said:   
fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
 

  
Dunno the answer to that.  But can say for certain there is no requirement to keep it updated.  That is strictly up to the individual homeowner.
 

  what do you mean updated?

For Title Insurance, you only pay once that's it. It is not like an annual subscription service, right?

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shinobi1 said:   
fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
  
Dunno the answer to that.  But can say for certain there is no requirement to keep it updated.  That is strictly up to the individual homeowner.

Surprised nobody chimed in yet, this seems pretty common knowledge.  There are two types of title insurances.

Lender title insurance protects the lender from losing money in case of liens.  It is requirement in a sense that no bank will give you a mortgage without it.  Technically, this insurance offers no protection for you, only for the lender. 

Owner title insurance covers similar problems, but you are the beneficiary.  It is a different product that is purchased separately i

http://www.inman.com/2015/05/11/understanding-the-difference-bet...
 
Since you mentioned that you bought a policy "through a lawyer", it is likely that you bought an owner insurance, but you may want to double check on that.  

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shinobi1 said:   Agree with other posters who point to title insurance as the backstop to any potential trouble for OP.  Hope OP bought it.

One thing, though, about title insurance:  absent updating it is essentially a wasting asset in a rising price environment.

This is not a consideration today for OP because he states home purchase was in February.  So to use an extreme example:

You buy home today for $x and discover a title defect in 2027, at which time value of home is $2x.  Are you covered?  Yes.  But only for $x.

Takeaway for OP:  get to the bottom of whatever is happening to you.  Passage of time is not necessarily your friend in this matter.  If there is a problem with your title you want to discover it sooner rather than later.  Alternatively relax and enjoy life, but be fully prepared as you go along year after year, especially in your vexing situation, to keep your title insurance up to snuff.  Here is a reference:

Title insurance updating

Wouldn't it be highly unlikely for the financial loss due to a title defect to be anywhere near the original purchase price?  Typically what you are really getting is a legal defense against any claims on the title.  From a practical standpoint, it would be hard to imagine there being a real need to purchase additional title insurance as a home appreciates in value.  Any real life case studies where this was an issue?  

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fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
  No although most mortgage lenders require it.

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He was a programmer (which I consider myself to be as well) for a big insurance company - so was very easy communicating with him and no drama.
  
A programmer who is good at communicating? Huge red flag. This story doesn't add up.  

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cajundavid said:   
fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
  No although most mortgage lenders require it.

  you don't need title ins for quit claim deed. A lot of sketchy sales are quit claim, you pay pennies on dollar but take risk that there's someone with a claim

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dcwilbur said:   
Simply write "Return to sender.  Addressee no longer at this address" across the front of any mail that isn't yours and leave it in your mailbox. 

  
Good advice.  If you get a few everyday, buy a $5 stamp with this wording!

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23 different business at the same address... they must be scams. Before careful, the victims may show up in the middle of the night and take revenge and mistaken you as the scammer.

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Kevo171 said:   
He was a programmer (which I consider myself to be as well) for a big insurance company - so was very easy communicating with him and no drama.
  
A programmer who is good at communicating? Huge red flag. This story doesn't add up.  

  I have people skills!

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This pretty much sums it up: https://www.youtube.com/watch?v=Hox-ni8geIw



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I have been in a similar situation. The one bit of advice I have, any mail that goes to your house- it must accidentally open. If there is a problem then you need to know about it.

In my case they even sent a private investigator to my house. I got calls for the prior owner even tho the phone never went to the house address. Strange things happened.

I would never endorse breaking the law. On the other hand do what you have to do to self protect.

YOu bought title insurance so that is good. For peace of mind you could visit your county court house and look over your documents. If it is a small town mention to the clerk your concerns. 

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fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
  NO  ... some deals are still abstract and lawyer blesses that.

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READ your title insurance clauses. Most title insurance has an escape clause for items that should have been known or discoverable.

Also check the statute of limitations in your state and county. It may be a good idea to review this with the attorney who handed the situation.
IRS and other government agencies as well as other companies have been known to file first and hope you don't keep up. When they go to court and you do not show up, the judge is very likely to grant a lien.

I think this may be worth LifeLock.  Worst case, they should alert you if something comes up.

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'presidential habits' - love that, OP.

 

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It floors me that the OP hired a lawyer and did everything right and STILL might have trouble.   Your advice is 1 step short of retaining legal council. 

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1. Make sure you bought not just "Title Insurance" but also "Owners title insurance." Usually listed as a separate line item on your closing docs, and you get the policy.
2. Keep returning mail to sender.

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gasaver said:   1. Make sure you bought not just "Title Insurance" but also "Owners title insurance." Usually listed as a separate line item on your closing docs, and you get the policy.
2. Keep returning mail to sender.

  what is the difference?

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Glitch99 said:   If there was a lien, you wouldn't have been able to transfer the title without first settling debt.
  
That's not completely true, or there wouldn't be a need for title insurance. If there was a lien, OP shouldn't have been able to transfer the title.
shinobi1 said:   So to use an extreme example:

You buy home today for $x and discover a title defect in 2027, at which time value of home is $2x.  Are you covered?  Yes.  But only for $x.

  
Someone else mentioned this, but the typical example would be you purchased a home for $x and if a title defect pops up it is a small fraction of $x. The insurer is just going to settle the lien rather than give you $x. Unless there is some crazy case where there is a lien for more than $x (not impossible with interest or something like a $100/day fine for something), but that is still probably not worth insuring against.
fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
  
No. As others have pointed out, there is owner's title insurance and lender's title insurance. Neither are mandatory, but most lenders aren't going to lend without a lender's policy. They typically aren't going to care if you have an owner's policy. What's interesting is that they're both insuring the same thing, but with two different insured parties.
rufflesinc said:   
cajundavid said:   
fleetwoodmac said:   Isn't title insurance mandatory in all US states anyway?
  No although most mortgage lenders require it.

  you don't need title ins for quit claim deed. A lot of sketchy sales are quit claim, you pay pennies on dollar but take risk that there's someone with a claim

  
You don't really need title insurance with any type of deed. In a perfect world, you wouldn't really need title insurance with a warranty deed. The main difference between a quit claim and a warranty deed is that with a QCD, the grantee is basically saying I'm giving you any, if any, ownership I may or may not have in this property for $x and with a Warranty Deed, the grantee is saying I'm giving you any, if any, ownership I may or may not have in this property for $x, but I'm warranting that I do in fact have the ownership that I told you I had. I could QCD OP's property to ruffles and he would then own the same 0% of OP's property that I currently own. I could also Warranty Deed OP's property to ruffles, but then ruffles can come after me for the 100% of OP's property that I was warranting that I owned.

So even without title insurance, if you purchased property and received a Warranty Deed, and there ends up being a title defect, you could legally pursue the prior owner for damages (but could not if you received a QCD). So really the title insurance is there to protect from that owner not correcting the issue. Sort of like car insurance, you would usually go through the insurer if you did have an issue, and they would either try to get the prior owner to fix it first, or pay out and pursue the prior owner.
JW10 said:   READ your title insurance clauses. Most title insurance has an escape clause for items that should have been known or discoverable.
  
This is a very good point. When you really look at what title insurance does and does not cover, it's almost worthless. I already pointed out that basically what they're covering is a small fraction of $x purchase price defect rather than $x. Then what they're really covering is the prior owner not being able to correct the issue or being judgment proof. And at the end of the day, it's mostly just there in case someone handling the title work during the transfer didn't just miss something. But no buyer will buy a property without an owner's policy, and usually the seller pays for that. And no lender will lend without a lender's policy, and usually the borrower pays that. So title insurance companies rake in quite a lot of premiums (and again, usually two on a purchase that are essentially covering the same thing). If lenders were forced to pay the lender's policy premiums, they would almost certainly self-insure.
sunsetcliff said:   It floors me that the OP hired a lawyer and did everything right and STILL might have trouble.   Your advice is 1 step short of retaining legal council. 
  
The truth is there is probably no trouble at all. He said he got title insurance, so there was almost definitely a title search that came up clean. Anyone can file a lien against his property tomorrow for the prior owner, and it would not hold up.

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fleetwoodmac said:   
gasaver said:   1. Make sure you bought not just "Title Insurance" but also "Owners title insurance." Usually listed as a separate line item on your closing docs, and you get the policy.
2. Keep returning mail to sender.

  what is the difference?

  
There is no "title insurance". There's "lender's title insurance" and "owner's title insurance". Lender's covers the lender in case of loss; owner's covers the owner in case of loss. But they're both basically covering the same possible losses. Yay two premiums.

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Clarification - I am more worried about about the hassle and expenses involved in clearing out any liens etc. that may come up next time I try to sell the house (maybe 5 years down) than an actual "damage" arising out of a claim that I have to settle/pay off.

I have three layers of protection(s):
1. I got warranty deed, and the previous owner(s) are most probably not judgement proof. Both husband and wife works. The had bought the house cash 4 years ago and had no mortgage on it. But more important than that, the guy seemed to be of a type who negotiated hard but then made sure he exceeded contractual expectations to deliver - i.e. he values his commitments and is professional about meeting and exceeding them. So if any problem did ever come up - I think it may get settled without even getting contentious.
2. Due to my typical analysis/paralysis nature - I quizzed my lawyer about the title insurance. I do have an owner's title insurance, in addition to the lenders insurance that I paid for. However, the lawyer (apparently a straight shooter, no games, ex-army intelligence kind of a guy as far as I could tell) explained to me that CT has some law which almost makes title insurance irrelevant once Warranty Deed is granted. He explained to me that a lien has two pieces of information - the property and the person - based on which it is issued. As soon as a Warranty Deed is issued in CT - the "person" name will not match in the lien - and hence it will not be enforceable. Therefore, the only liens I have to ever worry about are the ones that get approved by a court AND gets registered with a county before the midnight of the day the Warranty Deed is issued. Those liens should anyway have come up in title search (like the 26k IRS Lien, with the wrong name, did) - except for the 2-3 day window between the title search and the issuance of the Warranty Deed which is at risk. Title insurance is really, only, covering this thin period of time.
3. I have not double checked all the terms and conditions of my owner's title insurance policy. I'll send an email to the lawyer to send me the exact terms and conditions - or point me to which document (among the huge pile he gave me) has it.

Given all the above - I am more worried about the hassle factor - like the effort/money in quashing the 26k IRS lien the previous owners had to spend.

rated:
FYI - opening any mail sent to your house is legal:

https://www.fatwallet.com/forums/deal-discussion/1013973

Ie - my infant son's Social Security card was mailed to our house and his name was on the envelope. It was legal for me to open his mail.

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Two things:

It's good that you have title insurance. Make sure you read your policy carefully and provide timely notice of any title issue or defect. Title insurers are like any other insurer (maybe even worse) at finding reasons not to pay out. Failure to timely notify is one of them.

Check with your state's department of state and look for a corporation search. If this person registered these businesses they should be on that site. If so check to see if the registered address is your house. If so, you may be able to reach out to your state and get your address removed.

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The funny thing is- had the callers simply been polite to me, I would have told them what I heard thru the rumour mill.  The gal they wanted was living in another part of the state- ABC-town. 

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Title issues and title insurance is a rather technical and widely misunderstood topic. So, not surprisingly, the vast majority of the posts here, although well intentioned, are incorrect.

For starters, title insurance would not necessarily cover all liens. For instance, suppose that a landscaping company hasn't been paid in full prior to closing. The previous owner pays them at closing, but the check bounces, and the landscaping company ends up filing a lien. A basic owner's title insurance policy would not cover this. An expanded owner's title insurance policy would cover it, but most homeowners (as well as most residential loan officers, residential processors, and even many residential attorneys) do not know the difference, so they only purchase basic policies. The situation can be even worse than that, as it's not uncommon for residential owner's policies to be issued in a way that negates most of the underlying protections.

Further, title insurance policies work very differently from other types of insurance, so homeowners expecting to make one phone call to make a claim and to then receive a check from the insurance carrier are very likely to be in for a huge surprise. This is not to say that title insurance is worthless. In fact, it can be quite helpful and valuable, but it needs to be structured and purchased correctly on the front end, which on the residential end is not done 99.99% of the time. Further, if there's ever a serious title issue, you have to know how to properly file a claim. On the commercial end, there is a lot of thought that goes into the exact type of title insurance policy that is purchased on the front end, the endorsements that are also purchased, the actual exceptions that are added and negotiated out of it, etc... Further, on the commercial end, if there's ever a claim, the claim is almost always filed through an attorney, as it needs to be done a certain way in order to preserve the claimant's rights, and even then, most title insurance claims end up being quite difficult.

So, unfortunately, given the incredibly lax title standards on the residential end, and the rather technical nature of title issues and title insurance, the vast majority of the population does not receive the level of protection that they expect to receive from their owner's title policies.

To make matters worse, most people have no idea about the practical day to day things that title insurance does and does not cover. So, a number of things that people have mentioned in this thread would not be covered by any title insurance policy, no matter how it is structured, but are also not a concern to the OP, as they would not create an encumbrance against the property. For instance, in most if not all jurisdictions, unsecured judgments against the previous owner do not give rise to a specific lien against real property. Instead, once they are properly recorded, they create a general lien against the previous owner's assets owned by him/her at that time. If, by the time the judgment is recorded, the previous owner no longer owns a piece of property (and the property was acquired at an arms length transaction by a bona fide purchaser), the judgment would not create an encumbrance against the subject property.

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geo123 said:   For instance, suppose that a landscaping company hasn't been paid in full prior to closing. The previous owner pays them at closing, but the check bounces, and the landscaping company ends up filing a lien.
 

  You are talking about a prior lien that was satisfied at closing, then the check subsequently bounced and left that prior lien unstatisfied, right?  Because if the money was simply owed by the previous owner and paid, once the check bounced (after closing and the new deed had been recorded) it would be too late for the old creditor to place a new lien on the property, right?

Skipping 17 Messages...
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gremln007 said:   
dcwilbur said:   
Simply write "Return to sender.  Addressee no longer at this address" across the front of any mail that isn't yours and leave it in your mailbox. 

  
Good advice.  If you get a few everyday, buy a $5 stamp with this wording!

  I would buy a packet of labels and print them from your computer. There's plenty of templates out there and usually one provided from the website of the specific company that produces the labels. My wife found a bunch of labels from a local thrift store for very cheap to use for addressing invitation envelopes.

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