What We Have Here Is A Failure To Communicate.
So there is this house that I am planning to purchase which was found through normal real-estate channels. The property is an REO that is held by a major nationwide bank and is being and always has been represented as having a clear title.
The title, through some miraculously retarded SNAFU, is not clear. I found THIS out by doing the title attorney's job (he couldn't find anything) and I have notified the bank. There is, in fact, a lien for over 20k on the property. The bank refuses to accept a revised lower offer, and they refuse to do anything about their mess-up. I threw my earnest money at this property with a clause that allows me to back out due to the lack of clear title, so I am protected that way, and I can still get my earnest money back. I'm just mad.
Really mad.
Mad because I have a buyer who timed my purchase of this home to coincide with the expiration of their apartment rental. Mad because this fantastic deal is going to fall through. Mad because no matter WHAT I do people just WONT do their freaking jobs.
When I get mad, I get even.
The phantom lien holder will sell me the 20k note for 10k. Should I take it and foreclose on the bank that holds the deed? This would guarantee that I still make a profit, and also put the smack down on the bank that is trying to screw me.
My question is this : Should I go for it? I've never had to foreclose on anyone thus far - least of all a BANK. Also, what more fun could I have at the bank's expense when I'm done?
CIVIL WAR!! Great Guns N Roses song!!! (Sorry, just a little sidenote)
GnR. That is what I started humming, when I saw the post. Ahh, it brings me back to my high school days.....
Absolutely Kitty, go for it. Once the bank has showed up in court to answer your suit offer to buy their position at a discount and let them out of the foreclosure. Make sure the $20k is infront of the bank and not behind though.
I love this game.
Once you are issued title insurance you do have a free and clear title. If the attorney told you nothing came up and was willing to issue the insurance there is no concern to you. That is why the attorney has E&O. If you contacted the 2nd lien holder and made a deal with them you are insane. At the time of foreclosure, the bank was probably notified and signed off on the sale. You might pay them and they have no right to the money.
The only thing that this will guantee is that you paid an extra 10K for the house.
Lori
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Kitty,
This is very common in foreclosed properties. If you buy the property and go to sell it. The lien shows up, all you have to do is give your title insurance policy to the buyer's and there will be no problem.
I am closing five loans on Friday for investors that have liens, foreclosures, and even back taxes on one for 1956. None of these items will stop the loans from closing.
Sit down and relax
Lori
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Hi I have been working on this deal with litter of the kittens and It seems to me some of you think we are right for backing out on the deal and some think we are wrong.
Here are the facts
1. The bank (seller) has the home listed with an agent and we made an offer and it was accepted.
2. My banker requested a title search and their attorney found a cloud on the title. He let me know about it and said it should not cause a problem. I asked if I could get title insurance and he said the seller had agreed to provide insurance for my bank but not myself. He said he thought he could get me insured.
3. I do not like clouded or otherwise damaged title and I do not understand why anyone else would. I felt that knowing my luck the title insurance company would find a way to get out of paying or maybe they would go BK and I would be left with the balance of this old lien.
4. I contacted the attorney who holds the collection rights to this lien and he says that it is a totally valid lien and he is willing to sell it. I also know from tax records and title searcher that this lien is in first position.
My question is are we insane as TINMAN says or are we right.
I am also hold the opinion that most people in any field are just lazy and that is why we have so many title problems.
I hope there are many people out there buying property with clouded title and I hope I can exploit and expose problems such as this and take full advantage.
[ Edited by kensinvest on Date 04/28/2004 ]
[ Edited by kensinvest on Date 04/28/2004 ][ Edited by kensinvest on Date 04/28/2004 ]
Kensinvest.
The time has come the Walrus said. to go and look yourself. If the lien is number one. Consider the purchase but first make sure you can utilize it as a foreclosure weapon. I have the feeling that the bank would have just eliminated the item with a Policy of title Insurance. I would take an assignment of it and attempt the foreclosure. You may wish to cut the load a bit merely to buy a partial interest or execute an agreement for a half ownership in exchange to foreclosing the instrument. At least you make a half. But you seem to be a good bargainer so go for it.
If the bank was going to eliminate the liens it would be fun to receive in the closing a statement as to just how this would be done and what evidence of removal would be presented.
While laboring in a title company I have in the pastd done such things. Write the Policy and with the other hand eliminate the item. But with great care.
Fun situation you seem to have it in hand take your best shot.
Lucius.
Kensinvest,
Every deal I've done this year with an investor has had a title issue with a lien. If you feel that uncomfortable don't buy the house. Someone else will.
I would never do anything that "didn't feel right". Just move on to the next deal.
Good Luck
Lori
You are not insane. Everyone has a different level of their comfort zone.
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Lufos,
I have seen many mortgages show up after the foreclosure. It was my understanding that if a mortgage holder was notified and signed off when served they had no recourse. If they were notified and did not sign off or show up they had no recourse. Is this correct? I have been invovled in one way or another with thousands of closings, once you have title insurance you are covered. Is this not true? I have never been involved with a deal when a lien superceded the title insurance.
Lori
Lori
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Kensinvest,
The entire matter comes down to whether the lien is any good. What is the nature of the lien? Certain liens survive foreclosure, most do not. Was the lien properly filed/recorded? Did the lienholder recieve notice of the foreclosure proceedings.
If the lien is sound and you can buy it at $.50 on the dollar you can almost certainly make a buck on pursuing the lien
If the lien is faulty in any way then its not worth the paper its written on.
So somebody has to make a decision regarding the value of the lien. And if you decide the lien is valid then somebody has to go about the work of perfecting the lien to get it paid.
But I wouldn't just walk on the principle that "I don't like clouded titles". I would examine that cloud very closely and evaluate the possibilty that it is a rain cloud and whether I can get it to dump its pennies on my property.
You might also check out the "third mortgage" post in the paper forum to see a guy in a kinda similar position.
How do I perfect the lien? I'm not 100% sure I understand what that means.
Also, I am now able to get title insurance on the property, but since the lien is clouded I would have a heck of a time selling it to anyone.
It is very frustrating.
Quote:
On 2004-04-30 12:02, KittyLitter wrote:
How do I perfect the lien? I'm not 100% sure I understand what that means.
Also, I am now able to get title insurance on the property, but since the lien is clouded I would have a heck of a time selling it to anyone.
It is very frustrating.
KITTY,
No you will not have a problem. When you go to sell all you have to do is give the seller' a copy of your policy. BAM!!!!! Everything is removed. I just did that this morning. A friend is selling their home they bought in foreclosure in 01/2004. I got the property report yesterday, it had a $73,515.96 lien on property from Wells Fargo. All I did was call Julie told her I need a copy of her Title Policy. She faxed it to me today, I faxed to Closing Agent's office, I am sitting her looking at a clear Property Report. I am waiting on the buyer's title policy to be faxed to send to their bank.
It really is that easy
Lori
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