Funny Situation.
new investor just getting started with about 7 preforeclosure deals under my belt.
i came across a lady in in preforeclosure who is willing to sell, but based on a clause in her fathers will she cant sell because the will reads the property is to be used for her and her future heirs use. she said she had a sale fall thru already because of this clause.
my question is what can i do? the lender is forclosing on a $52,000 HELOC the home will sell for $90,000. i dont want to buy at the foreclosure auction cause the deal would be lost with investors bidding up the price. i have zero knowledge in notebuying, but i was thinking of buying the note and foreclosing myself. is this possible? would a bank loan me money for this? if i could forclose being a private investor would i be allowed to make a profit? i realize that when a traditional lender forecloses they can only recoup their money and legal fees and any additional proceeds go back to the owner. is this the same case when a private investor forecloses? any advice about this situation would be much appreciated.
I'm confused. If the lady you are working with has title to the property, why can't she sell? Is the lady bringing up the will and chasing away her potential buyers?
Unless the property is held in an irrevocable trust, I don't see how the will governs the future actions of an heir who has already inherited. Her father left her the property "for her benefit and for her future heirs". It is to her benefit to sell the property now to get out from under her the debt and avoid the pending foreclosure.
she said the lawyer explained to her that the property could not be sold due to the wording of the will. i will attempt to follow up with the lawyer myself. if for some reason she can not sell, what are the answers to my other questions?
eric
Yes, you can definitely buy a note and foreclose yourself, but regardless if you are a private investor or bank, the same rules apply. So, let's say you just buy this note for $52k and foreclose yourself you would be in the same boat as the bank, that is now foreclosing. The way an investor could make a profit from buying a note, is to buy at discount. If you were let's say able to purchase this note for $30k, the difference between 52k and 30k, would go to you.
Now, the question would be wether or not you could purchase this not at discount, I would say highly unlikely, if the value of the house is 90k. There might be however other creative way to capture her equity.
You should talk to a lawyer in the property jurisdiction. The real question here is what rights her heirs have (if any) and whether they can exercise those rights against the purchaser (e.g., rescind the sale) or just the seller (e.g., sue her for the value of the property she sold).
Bottom line is that this is not simple no-brainer case. Whether it's too much trouble considering the upside of the deal only you can answer.
Best of luck.
If the will was all that restrictive how did she get the HELOC?
thanks for the replies, ive since discussed it with my local lawyer, and decided to stay away for now and prehaps go after it at the auction sale. he also said someone is going to catch trouble for issuing that HELOC.