One of the most important steps when trying to take advantage of a short sale is to get a title search done. Unpaid liens often ruin a short sale. Many people assume the title on a short-sale purchase is free and clear. That could be a dangerous and expensive assumption. In short sales the delinquent owner may have neglected to pay for work that had been done on the property. The unpaid contractor could place a legal claim on the property for the unpaid bill. This is called a mechanic's lien. This makes it difficult to transfer ownership of the property until the debt is paid. 

One way to ensure there is not a mechanic's lien or any other claim on a property before you purchase it is to have a title search done. A reputable company can do a thorough search of the title and find out if any third party has a claim on the property. While the previous owner is technically responsible for the unpaid debt, in some cases it can transfer to the person that purchases the property if they have already closed on the property. At the very least a lien can hold up the closing on the property or become a deal breaker unless the lender is willing to intervene. 

A title search can find out if there are any unsettled liens against the property. That includes contractor liens, IRS liens, property-tax liens, homeowners’ association “special assessment” liens or second mortgages. If the buyer doesn't have a title search performed before closing or the deed recordings are not thorough and accurate, the new owner can be held responsible for the old liens. Therefore before getting involved in a short-sale purchase pay the small fee to have a reputable title company perform a title search.