I Cant Believe Someone Called
This is a 3 part Question
I talked to the owners(husband anf wife)And i covinced them into doing a sub2 when all is said and done Ill have about 10,000 invested in this property(credit repair moving money and back mortgage payments)
What happens if they do the same deal with another invester or worse sell there (my) house to a cash buyer
Were does that leave me and my 10 grand that i gave them ?(of course I didnt submit the sub2 to the records,because
of the due on sale clause,which there is)
part 2
what happens to the down payment that the default owners put down when they bought the house?
Part 3 where Can I buy ,steal or acquire the forms that I need to do a sub2 deal
The scenario
the default owners owe 177,000 on there mortgage no liens no tax problems the guy lost his job
the market value is about 215 -225
there nod was delivered about 2 months ago
And the hammer drops in 28 days (court steps)
Thank you all you have helped me in the past by just reading everyone's posts
i know that you guys cant give legal advice
Pete
Welcome to this board Pete.
I'll try to answer your many questions for you.
First of all when you purchase a property subject to the existing mortgage, a deed is transferred from the sellers to you, the buyer. A deed is given subject to those liens and both parties acknowlege the due-on-sale clause existance.
Is this what you have done? It sounds as though you may have the deed but haven't recorded it. This is a HUGE mistake. Read up on the due on sale clause. It is a MUCH bigger mistake not to record your deed than to risk the due-on-sale clause. Let me repeat. It is much riskier to not record you deed than worry about the due-on-sale clause.
If you don't record the deed the sellers could come around and sell your house. The world still thinks the house belongs to your sellers. It is very important to record a deed.
If the sellers do sell the house after you've given them 10 grand, your down the sinkhole buddy. Depending on your state's laws you may or not be able to prove you are the owner. This is a sticky mess that will cost you thousands just in litigation.
Keep in mind that you don't pay 10 grand to the sellers. If there are several months of backpayments, you take the property sub2 and THEN catch up the payments. So technically you didn't give them 10 grand. You'll be able to sue for that little bit on money--should you not record your deed and the sellers sell to someon else--but the cost of litigation will likely be more than it is worth--plus how are you going to collect from somone with no money or assets.
Next, the down payment that the sellers put down on the house is of no concern to the transaction. If they are selling to you at what they owe, then they are losing that money.
I would try to find a competent attorney who understands the process of sub2. My attorney is pretty good but has never run accross sub2 although he knows that it is legal. He prepared a simple addendum that I use in addition to my standard purchase agreement.
For closing I get the following:
-Deed
Other state specific forms require to record (in -Iowa, Groundwater hazard statement and declaration of value)
-seller's affidavit (optional) just stating that the deed signed was adequate conveyance and that they agree they know what they are doing and such.
-limited power of attorney just incase anything crops up that you need to sign something for the previous owners
GOOD LUCK and I hope that this helps. Feel free to post any other questions.
Hi Pete,
Part 1: Always get the deed. They can't sell what they no longer own. Careful what you offer in addition to past due payments. The perceived equity can easily be demonstrated not to exist if they were to go conventional (which they have no time to do anyway)
Part 2: They got whatever you gave them. But, I think you need to go back and get the deed.
Part 3: You won't get what you're looking for for free. I suggest purchasing John Locke's course. You'll also get a Mentor.
[addsig]