Assignment task: Sammy Seller offers to sell his home and property for $500,000. However, on the property is a tax lien from the state of New York for $25,000 and an unfiled mechanics lien from Carl's Construction for $50,000. Sammy does not disclose either lien when offering the property for sale nor is either lien disclosed in the contract. Bobby Buyer comes along and without notice of either Lien purchases the Property for $500,000. He also obtains a General Warranty Deed for the Property. 5 years later, Bobby Buyer sells the property to Susie Second Owner for $550,000. At that time, Carl's Construction claims the mechanics lien has to be settled. And he says that Bobby won't be hurt because he is making $50,000 on the resale so Bobby isn't losing money.
Q1. Did Sammy Seller have marketable/merchantable title when he sold the property. Please explain your answer. Would your answer be different if no Tax lien existed. Again, please elaborate. Would your answer be different if there was a building code violation when Sammy sold to Bobby. Please explain the basis for your position.
Q2. Does Susie Second Owner have clear and merchantable title. Please explain your answer. Would your answer be different if no Tax lien existed. Again, please elaborate. Would your answer be different if there was a building code violation when Sammy sold to Bobby. Please explain the basis for your position.
Q3. What is the legal effect of Carl's position that repayment of his $50,000 mechanics lien will not harm Bobby in the sale to Susie because Bobby will not lose money on his investment.