Release Of Lien, Before Lien Exists.
Greetings all! I was recently contacted by an individual who is in the following situation.
-Received an 86k gift from mother inlaw.
-Paid cash for condo with the gift money.
-Took a mortgage on condo (65k)
-Lost job and spent all the money.
-Mother inlaw filed bankruptcy about a year later.
-Mother inlaw's creditors are attempting to put a lien on condo for 86k.
-First is foreclosing
ARV is 90k with 1500 repair costs.
Other debts:
- Condo assoc: ~1500
- Utilities: ~1800
- Property Tax: ~1900
- Arrears: ~3500
I see some equity here except for that pending judgement by the mother inlaw's creditors. Does he have right to put a lien on the property? My thought is that he could pursue a personal judgement and nothing more.
Mother inlaw's creditor has applied for surplus from foreclosure sale. There will be no surplus for him.
Can I pay him to drop the lien and just seek a personal judgement? Can he release his right to a lien? Is there a standard form for this? In my opinion the lien is worthless because he is not going to get anything anyway.
Thanks for any help.
So if you could get this deal for the full face value of the first mortgage you would do it? Or would you need to negotiate a discount on the first as well?
Who's the first with?
As to whether the creditor can attack the condo's title-- probaby (he might not win but he can try). If the MIL filed BK within a year of the gift the BK trustee could rule that it was done in anticipation of the bankruptcy and order restitution.
You can ask about him releasing the lien. He has the right to do so. He may do so for very small money if he gets convinced there's no equity in the property. But I wouldn't count on it. More likely is buying the first and foreclosing on the lien holder.
Thanks for the post commercialking. I was planning on attempting to negociate a short on the first, but if that failed and I were able to remove the 86k lien I would probably still buy the property (perhaps subject-to if I could get the loan reinstated).
The first is with Ameriquest.
What is a reasonable amount to offer the creditor of the MIL? If the stars all align on the day of the auction the best I could see him getting is a couple grand. But I don't see that happening.
In most states a good faith buyer cannot be made to pay for a fraudulent transfer by other parties. Meaning you buy the house in good faith from the seller it is the seller's problem and not yours
That is simply put but I would talk to an attorney in your state.
[addsig]
Relative to what to pay the lienholder, I'd say a couple of grand is about right.
Figure it this way. If you bought the first and foreclosed to get rid of him it would cost you more than that in legal fees.
You might even offer him a little more if your negotiations with the first make you think they would take a short sale.