Is it safe to buy a property that is currently under mortgage?

I am looking at an apartment that I really like, but the seller informed me that it is still under a mortgage with their bank. I am worried about the legal risks and the process of clearing the title before the sale is finalized. What are the essential steps I should take to ensure my down payment is protected and the lien is properly removed? Has anyone here successfully navigated this type of transaction before?

It is actually quite common for properties to have an active mortgage. Your lawyer or title company will handle the 'payoff' during closing, where your funds go to the bank first to clear the lien.

Don't worry too much, this is standard procedure. Just make sure your down payment is held in an escrow account, not sent directly to the seller.

I went through this last year. My advice: demand a 'payoff statement' from the seller's bank before you sign anything. It shows exactly how much is owed to clear the title.

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Ensure you purchase title insurance. It protects you in case there are any hidden liens or legal issues that pop up after the transfer of ownership.

Just make sure the closing agent is reputable. They are the ones responsible for ensuring the existing mortgage is satisfied with the proceeds of your sale.

I’ve bought two properties this way. As long as you have a solid real estate attorney, they will ensure the lien is released at the registry of deeds.

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The seller cannot legally transfer the title to you with an active lien unless the bank agrees to release it. Your lawyer will coordinate this 'simultaneous closing'.

Whatever you do, do not pay the seller directly. All funds must pass through a title company or an attorney-escrow account.

It’s a routine transaction. The bank gets paid off at the closing table, and they issue a 'discharge of mortgage' document shortly after.

Make sure your contract includes a contingency clause that the sale is subject to the seller providing a clear and marketable title.

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I was nervous my first time too, but trust your closing attorney. They literally do this every single day for hundreds of clients.