Recouping/placing Lien/short Sell
My boyfriend and I made a offer on a house that need repairs in order to get a FHA loan. Now that all repairs have been finished (by us--to the tune of $9500 in receipts + boucoup manhours), we had a closing date of last Thursday. On Wednesday, we find out through the title search that the seller has liens and hasn't paid his mortgage for 5 months. 
He also says he doesn't have enough money to go to the closing table. A liz pendens has been filed, and we are trying to talk to the mortgage holder to make a deal. Is there anything else we could be doing???? Thanks
If your seller is in default, perhaps a short sale proposal may be in order.
Unless there is ENUF equity to make it worth it I would not have spend the $$$$$$ to fix unless I had firm title of the property.
Why did u not check for liens in the first place before starting????
SKI
I agree that a short sale right might work the problem is the bank will look at the property and see all your work that has now brought the value up. They cannow probably get thier value out of the property if the took it over.
You can also try to short sale the liens, painting a bleak picture that it will go into foreclosure and they will be lost, unless it is tax lien.
The old owner has probably not signed too many contracts, and any he did sign say you are probably taking over the property as is. At this point he is not liable.
You need to now figure out if it is worth it to pay off the liens if all the above does not work, or walk away learning from your experience.
BEFORE you pay a dime on a property you should do a preliminary title check for liens, and talk to the lender about behind payments. Then once eveything ok, do not do repair until closed.
I definetly recomend title insurance just in case. They will at least find problems you did not.
good luck
victorb said it best. ALWAYS obtain title insurance before making a purchase or you may be asking for trouble.
Sorry if this is a stupid newbie question, but...
"gold" states: "ALWAYS obtain title insurance before making a purchase or you may be asking for trouble."
Do you mean a preliminary title report before signing the purchase agreement and putting down earnest deposit? Or do you mean full-blown title insurance? At what point in the process?
Thanks!
Kevin
You can get a prelim before your purchase but it does not insure you against anything you might not see, which title insurance does. I don't ever (that I can remember) buy anything without title insurance. IE: there isn't anything to stop a seller, contractor, etc. from putting on another lien after you have viewed the prelim and before the deal is closed.
gold,
Thanks for the reply. I understand the difference between the prelim report and insurance.
So, is the timeline as follows?:
1. find property/motivated seller
2. run prelim title search to see if you want to submit offer to seller
3. if title is clear from prelim search, then submit offer (i.e., purchase agreement) to owner
4. if owner accepts, then get title insurance immediately
OR does (4) come before (3)? If so, then why pay for title insurance before you have a purchase agreement in place with the seller? That would not make sense to me.
I agree and understand that title insurance should always be a part of every deal, but I'm just trying to make sure I understand the timing.
Thanks again!
Take care,
Kevin
I agree with gold. Title insurance is cheap for you get from it. The general rule of thumb (as thought by my Property law professor) is if they are willing to give you title insurance you probably don't need it. Meaning that EXTENSIVE research is done on the title and title insurance doesn't want to have to pay out a dime, so just their research is worth the minimal price of the insurance. Plus should something (like the above story) slip through the cracks you are covered. I am unclear on something though. Why and how did you work on the property without having title? Did you have any written agreement regarding the work and the sale of the house?
Do you get title insurance before or after the seller has signed the purchase contract?
How much does title insurance typically cost? Is it dependent on the FMV or agreed sale price of the home?
Got off on title insurance. We allready know that wont help now.
I don't know how far in the hole your seller is. Short sale, offer the bank less than the debt. Allways worth a try offer less for the leans, that should work.
If you are out of liquid funds look into short sale.
If this owner mislead you.
If you have 10K in receipts that represents 30K in improvement. I would at this point put my own lean on the house if someone eles shortsales it they will come to you offering 10K. Bring your lean to the owner so he knows your not going away. Contract with him to sell splitting andthing over his dept.
I'm grasping at straws, I don't know the hole story if I missed something send me a private message.
As we all know" don't do that again"