My Home Closing Has Been Delayed for Months. Here's Why

I signed a contract to buy a house in June of 2023. I was ready and eager to move in and was supposed to close in September as the sellers asked for a later closing date.

Despite the fact I had my mortgage loan all lined up and was ready to go, it is now mid-December and I still haven't closed on the property. Here's why I've had to sign multiple extensions and I'm still waiting to make the house my own.

This problem delayed my home sale -- and it could delay yours

The reason I have not yet been able to actually become the owner of my new home is a simple one. There are two liens on the property. The sellers bought the property due to a homeowners association foreclosure. When they purchased it, there was a first mortgage and a second mortgage that were both very delinquent.

The mortgage holders had a legal interest in the property, which stayed with the house. The liens on the property meant the sellers had these outstanding claims to deal with -- they didn't own the home outright. They could not transfer the house and give me a clean title (which, basically, is a fancy way of saying full ownership of the property).

A mortgage lender won't give you a loan for a house if the sellers can't deliver a clean title and I wouldn't have wanted to buy a house with the outstanding claims attached anyway -- they would have become my responsibility. So I had to wait for the sellers to make a deal with these two mortgage lenders to pay off the unpaid balance so the liens would come off the home and the house could be transferred to me.

The sellers were not very clear on how long this would take and kept telling us that they were working on a deal with the bank and it would happen any day. This, of course, has turned out not to be true -- which is why I'm still waiting months later to finish the home purchase.

Be careful about buying a property with outstanding claims

In our particular situation, we were willing to wait for this house because it is a very special house. We could do that because we had another place to live and because we found a truly wonderful mortgage lender -- the best one I ever worked with -- who has helped us to keep our file open and active so we wouldn't lose our loan as we waited and waited for closing to happen.

This is not the case for most home buyers. If you can't wait months for issues to get resolved, you should be very careful about buying a home that has any liens attached to it (other than a mortgage that the current sellers took out and will pay back upon closing). If there are creditor claims on a property, it could take a while to resolve those and sellers may not always be able to do it on the timeline you expect.

It's also important to know that you'll likely need to buy title insurance when you purchase a home. Title insurance is issued after a title company does a search for any outstanding claims. If all comes up clear, they'll provide insurance so if some surprises show up down the line, you won't lose money dealing with the unexpected claims on your property. Your lender will require title insurance, and you should insist upon it even for a cash sale to protect you against surprise claims.

Since you'll have to get title insurance anyway, you may want to have a title search done early in the process -- or check court records in the county where the property is located -- before you commit to buy any home. This could save you from coping with the aggravation and stress I've dealt with and help you make sure you've made an offer on a home that will close on time.