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A house in Missouri was being sold and the owner wanted to negotiate a lower payment to settle the HOA liens because the buyer would not offer him enough money to cover both the HOA dues and the mortgage.(The amount offered actually wasn't enough to cover either amount in full)

The HOA liens was filed prior to the mortgage, which is owned by a private mortgagee, not a bank. The mortgagee had recently filed a new mortgage that replaced prior mortgages, after the HOA had already filed its liens. So I know the liens takes priority over the mortgage at this point.

The HOA agreed to a payout to release the liens that was lower than the total balance on the account.

Does that remaining balance disappear with the liens settlement and release, or does the difference between the amount paid to release the liens and the original account balance remain for the new owner?

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A lien is used to prevent sale of a property until a debt is paid. This has nothing to do with priority over a mortgage.

The HOA agreed to release the lien for some payment. The negotiation of that payment doesn't matter to the new buyer. Once the lien is released, then it is no longer listed with the county on the property, so the property can now be sold. The former lienholder cannot now apply a new lien to the property because the new owner is not a debtor to the former lienholder. This would be a terrible way to manage property sales, and no mortgage company would allow a mortgage for a property that could not be sold in case of foreclosure, which is likely why the mortgage holder was a private individual.

It is possible for a new owner to take on existing liens, but this would be clearly spelled out in purchase documents. There should be a statement on the title search results that no liens exist.

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  • To follow up on this, that depends from my understanding. The liens can be used to prevent a sale, or it would guarantee the proceeds/profits of the sale would go to the liens holders in order of priority before the seller would see any of the money. I should also note that the new buyers were involved in the negotiations of the liens settlement. They were paying cash for the house, and the private mortgage was filed by the previous owner to the current seller at that time, so no banks were involved in the sale at all.
    – Cee721
    Aug 29, 2022 at 15:20
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    Also, while the release of the lien prevents the new owner from being bound, the agreement between the old owner and the HOA could simply erase the lien without forgiving the debt vis-a-vis the old owner who would still owe it but not with the liened property as collateral.
    – ohwilleke
    Aug 29, 2022 at 16:17
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Also, to clarify, my question wasn't with respect to adding a new liens to the property after the sale, it was more dealing with how/if/when the new owner would become responsible for the existing liens had they not been released.

In the end, the result was the sale was closed, the liens/mortgage holders received the money they agreed to settle the debts for out of the proceeds of the sale, and the homeowner got whatever may have been left. The liens were then released.

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