Lien on me - Who has to pay off a lien on a fixture during a home closing settlement?

A buyer is closing on a property in two days, and they learn that the water heater is leased and not owned by the seller. The seller is claiming that the buyer needs to assume the lease and the lien on the unit.

The water heater was not mentioned in paragraph 2 of the Offer to Purchase and Contract (Form 2-T) at all.

Is the buyer obligated to assume this loan, or does the seller need to pay off the lien as part of the sale?

ANSWER: The seller will have to satisfy the lien or risk being in breach.

Paragraph 2(a) in Form 2-T clearly states that “ALL EXISTING FIXTURES ARE INCLUDED IN THE SALE AS PART OF THE PURCHASE PRICE, FREE OF LIENS, UNLESS EXCLUDED IN SUBPARAGRAPHS (d) OR (e).”

Paragraph 2(d) permits the parties to state which fixtures are leased or not owned and exclude those items from the sale.

Paragraph 2(e) is a catchall that allows the parties to exclude any other fixtures from the sale, regardless of whether such items are leased or have a lien.

In this case, the water heater is clearly a fixture under both paragraphs 2(a) and 2(b) in Form 2-T.

Since the water heater is a fixture and was not excluded by the parties in either paragraphs 2(d) or 2(e), the standard form language requires the seller to convey the water heater free of liens to the buyer.

If the seller does not, then the seller risks being in breach of contract.