What happens if due diligence turns up debts the seller swears they've already paid off?

This comes up often, and it's usually a paperwork gap rather than a sign the seller is being dishonest: a debt that's genuinely been paid off can still show up on a Personal Property Security Act search or in a title search simply because the lender never filed the discharge paperwork once the loan was repaid. Lenders aren't always prompt about this, and a seller who paid off a loan years ago can be perfectly truthful while a stale registration still sits on file.

That said, "the seller says it's paid off" isn't itself proof, and you shouldn't close on that assurance alone. Ask for written confirmation directly from the lender — a payout statement or discharge document — rather than relying on the seller's word, and if the discharge genuinely hasn't been filed yet, have it registered before or at closing so the public record actually matches reality going forward.

Treat every registered interest that turns up in a search as needing written confirmation one way or another, regardless of how confident the seller sounds, and don't let closing proceed on an unregistered discharge. A Treadstone business lawyer can chase down the paperwork and confirm the discharge is properly filed.