Usary?
We are in the middle of a lawsuit because some fast talking guy tried to buy the house subject to our mortgage without even telling us what the heck a subject to is. When we found out, my live in partner person added me to the deed to prevent the recording of the other one the buyer had ( lied about why he needed it) We want the mortgage paid off not taken over in our name! Anyway, we wanted to give them their money back but they would not take it and filed suit.
They jammed up our title with lis pendens and the mortgage is still too high and we are never going to sell to them now, anyway, I digress.
Part of the deal was that we lease the house from them for seven months for only three hundred less than our mortgage. Would this have been usary?
Our mortgage company has been so kind as to defer a payment so we can pay our lawyer and we put the money in the court system where it would be kept until this is settled.
I want to thank you for being here so that I know now what subject to is and it is because of this site we were able to prevent the taking of title.
Wow. I am very new to Real Estate, but from what I have learned about subject to, it appears that your live in partner person is trying some legal manuevering to get out of a contract that appears to be beneficial to him/her (paying $300 a month LESS then the mortgage and STILL living in the house for 7 months). It sounds odd that your live in partner person knew enough about contract law and real estate to cloud the title, but not what exactly subject to was? Is your live in partner person an attorney by chance?
Again, I am really new to this, and I am SURE the experienced investors on this site will correct where I may be wrong.
David <IMG SRC="images/forum/smilies/icon_rolleyes.gif"> [ Edited by HightechRedneck on Date 02/24/2004 ]
It's also interesting you were apparently very willing to sign a document or two that you didn't understand, and now you're crying about it.
Moral is don't sign before you do understand, but be mature enough to do whatever you agreed in writing to do.
Actually it was me who did all the research after the fact, and no we did not do the manuvering. If it were not for this site I would still no nothing. And to a great credit to the michigan court website for all the case law and of course, the michigan legislature website. Oh, and I must tell you that this subject to predator is a liar and not very bright. His deed would have been rejected because it was one of those that came out of another state, didn't meet the recording requirements here, and the contract is so ambiguous (my new favorite word) that three different lawyers can't make sense out of it. One paragraph says the deal is contingent on a new loan and three paragraphs later it is subject to. My live in is prone to panic and we were not even in preforeclosure when this happened but getting toward it. I am the one who got in the middle because this person sat in the house and lied to my face. We even gave him the opportunity to explain and he said the paperwork was good enough for the bank. What bank? They didn't even apply for a loan until our lawyer said where is the financing you were supposed to have by xxx day? ten days too late. He told us to lie to our insurance company and not tell them we needed a rental policy. ??!! He didn't bother saying any of this until AFTER he got a deed or so he thought. Yeah, I couldn't stop the intial deal because I didn't understand it, but I spent about 50 hours on the internet looking up all I could about titles and contracts and subject to. Which is how I got here.
You are obviously prejudice in favor of investors so don't sit there and pretend like you care. If you are going to do a deal with a seller, just fricking tell him or her so they can make an informed decision as to whether or not the deal is right for them. And you did not answer the question which makes me think you may even be involved and are trying to squeak out more information than you deserve. You are probably him, just pretending to be from California and if you are you might want to look up the doctrine of clean hands.
You should not look at your seller as if they are retarded and will never catch on. Some learn faster than others.
We agree with JohnMerchant: Why are their complaints? The ink is dry on the binding contract and we would take you to court for breach of contract!
As for learning how 'Subject To' works, we suggest John Locke's material in the above 'shop' tab.
Eric & Rosa
[addsig]
You tell me what we were supposed to do, and oh, I didn't sign it. one paragraph says the whole deal is contingent on the buyer getting a new loan, and another paragraph says he is taking it subject to. We interpreted it to mean that he was going to be paying off the loan at closing and so did some of the lawyers we showed it to. Most of them said rescind the deal and give them back their money, the contract is ambiguous, and unenforceable. Besides, he led my friend the whole time to believe that he was getting paid off at closing. I thought so too, as I listened to most of the pitch. Not once did he mention subject to.
Ink is dry? Eric and Rosa? No the contract is not legally binding, if you read it you would cringe at the inexperience and lack of legal advice the drafter of this document exudes. He says one thing in one paragraph and contradicts it in another. Repeatedly.
Now who knows anything about usury?
[ Edited by angryatheart on Date 02/24/2004 ]
I'm not sure I understand. The property was in the name of your partner person (PP).. The PP gave a deed to this "fast talker guy". PP got money from him . What was the money amount & what did PP tthink he was giving it for. Did PP sign a contract? What was the intent of the contract? Was it to buy and payoff the existing mortgage or was it to buy and take subject to the mortgage??
Did he record the deed he received from PP. The deed PP put you on title , did that get recoreded?.
Lastly, you & PP are paying $300/mo LESS than the monthly mortgage amount , right?? That's the only question I can answer at this time. That's not Usury.
”You are obviously prejudice in favor of investors so don't sit there and pretend like you care”.
I do care, and consider any deal that is not win/win (in other words a good deal for the buyer AND a good deal for the seller) to be a bad deal (although possibly still legally binding).
“If you are going to do a deal with a seller, just fricking tell him or her so they can make an informed decision as to whether or not the deal is right for them.”
I agree, if the buyer really did not explain subject to, that is wrong. I would always recommend never signing a contract that you don’t understand ever last detail. Hard to imagine your live in partner person did.
“And you did not answer the question which makes me think you may even be involved and are trying to squeak out more information than you deserve. You are probably him, just pretending to be from California and if you are you might want to look up the doctrine of clean hands.”
I am not this person who you are doing business with, and can be verified if it comes down to it, by the board operators. I will be buying John Locke’s Subject To course long before I ever attempt a Subject to deal.
- and I clean my hands several times per day, thanks.
”You should not look at your seller as if they are retarded and will never catch on. Some learn faster than others”.
I agree, one should never look at the seller "as if they are retarded and will never catch on” I am sorry if my previous post made it appear that I was prejudiced against sellers and in favor of investors. ” Refer to what I said before about win/win deals.
I do, however, still stand by my previous post.
I can remember two sub-2 deals I had working that fell apart at the last minute when I reiterated (what seemed like the umpteenth time) that I would not be getting a new loan and that they would not be getting cashed out at closing. Who knows where the sellers mind is and what he/she is hearing when the details are being worked out.
I for one, take pains to make sure that the seller knows exactly what is happening. There is no need to sugar-coat anything. If the seller is really in need of my service then it's win-win. If there's a misunderstanding at the end of the road, c'est la vie!
Sounds to me like the investor has mucked things up (contractually and morally) and should let it go. There's nothing in it for him except bad karma!
As far as the original question; it doesn't sound like usery to me, but I'm not a lawyer.
_________________
Swetbak
[ Edited by swetbak on Date 02/24/2004 ][ Edited by swetbak on Date 02/24/2004 ]
No, no, we don't have their money the court does. All of it. He thought it was the deposit. The deed was taken under the premise it would not be needed until the closing. Nevermind. No one knows. We wanted to build a new house on some land that was not supposed to be included in the sale, now this guy new that. How were we going to qualify for the home package with this income to debt ratio still on the credit. Makes no sense. Let me spell it out for you...
1. The guy lied
2. The guy stole the note we were supposed to hold for the seller financing and held it for six days and then tried to switch it leaving out some of the original terms. That was the last straw, piled on the straw pile of lies he told
3. The guy got caught
4. The guy thought we would never stand up to his detroit lawyer, and that he could push us around because we are not rich
5. The guy needs to save face with his partner who we believe he lied to. She looked awful confused when we were discussing the payoff and insurance a week after the first meeting (which she didn't attend) She wasn't the only one confused.
6. We won't sell the farm like this he will have to kill me first.
7. Don't need to sell, I renegotiated the payment with the mortgage company because they were over charging the escrow. Got a fat check back too.
Moral of the story---- be honest with the seller. If my p would have known what he was getting into we would not have. We aren't that far into debt. Less than ten grand. Mortgage makes it more of course, but that can be dealt with in a regular house sale, not a subject to.
Angry,
Sorry to hear about your unfortunate run of events.
Usury is an excessive or illegally high rate of interest charged on borrowed money. doesn't sound like your situation.
However, even though you should not have signed a contract you did not understand, it does sound to me like the investor you are dealing with is inexperienced and rather unscrupulous. This type of investor (the unscrupulous part) really pisses me off.
Call your state department of commerce division of realestate and get an appointment to talk to someone there. They can tell you if the contracts are legally enforceable or not. If the contracts are not binding or enforceable, tell the investor what the state tells you and have your lawyer demand that they remove all lis pendens on your property. If they balk, take aggressive legal action against them.
I may get flamed for this, but if I were in your shoes, I would also file a complaint with the county prosecutor's office.
As an aside, you mention that the contract says it is contingent on a new loan. Review that part carefully. In many real estate contracts it actually says that the buyer's right to cancel is determined by the ability to get new financing by a certain date, not that the seller can cancel if the buyer does not get a loan. This can be misleading.
-rup
Thank you for the reply, and the paragraph states: this agreement is contingent upon the buyers obtaining a new loan in the amount of (the payoff approximately) buyer must show seller written proof of financing by xx date. Date long past suit filed before date came.
I am just tired of this. I have eaten, drank and slept law and real estate for two solid months. I know that hindsight is 20/20 but as I said before, I only got added to the deed I didn't sign the contract, and only to prevent the title from passing hands prior to closing. Closing is where they give you your money and you give them your property, and all liens are cleared up. isn't that the way property is supposed to be sold?
It does sound like this buyer may have really messed up that contract. Maybe his cut and paste skills weren't working that day.
I was wondering, you mentioned he stole the note you were supposed to hold for the seller financing. How did he steal it? (sorry if I missed the answer to this in a previous post).
David
Like I said the guy was slick. We were at a public place where a notary was and the guy suddenly became in a big rush to "meet his lender". He didn't give us the note at the copy machine. He didn't even give us a copy. We called and called for it and each day it was in the mail. Finally, five days later he said he would bring it out the next day. When he did, it was different. For one thing, there was a mistake on the first one that he made with his math. He made the same mistake throughout the purchase agreement. This new note was mysteriously corrected. Also, the one at the meeting was more than one page and had extra provisions for our protection, this one didn't. Further, the one from before was presigned by him and his partner, this one was signed in front of us at our table. We noticed it but were afraid he had already recorded the deed and it was a sunday so we waited until the next day to get help. We were afraid he would say oh well if you don't like it well you can get out of my house. He was getting very cocky. The very next day we called a lawyer and stopped it all. Please let us all just drop the subject ok. I am sure there are more honest people than not, but I think I will go with the tradition realtor type listing next time, if ever we get up the nerve to sell again.
Here is a solution:
Do you realize how much money you are going to spend on attorneys?
You need to contact the guy and have a meeting with him. I would also send a copy of the contract to the attorney who
filed the Les Pendence the property.
Meet with the guy, explain to the guy you did not know what you were signing and the contract contradicts itself. Tell him you are going to hire and attorney and fight this which is going to cost him money as well for representation. Ask him if he has another solution. If you could pay him 1k or 2k to release the Les Pendence I would go that route. Otherwise you will be paying about $25k to your attorneys! You signed the contract and deed. You should have sought advice before doing so. I am not saying that you wont win in court, but it is the cost factor and time it takes to get there.
Best Riches,
Jeff Adam
[addsig]
Like I said, some things are worth fighting for. I will not sell the family ranch to a crook. They started the litigation and now it is too late. We are set for trial in a couple months. I will not be pushed around by a crook. He is not going to be rewarded for his actions of fraud. With any luck he will be in jail--- again. Already convicted once for fraud, which again found out after the fact. Please no more I will leave you nice people alone now. Good luck with your deals just please be honest.
There are many ways to pass properties, and from your side of the story, It appears you were involved with a party that was unsure of handling the job. In answer to your usury charge, no interest rate has been discussed, and since you said you were renting it for 7 months from the new "owner" there is no interest involved. Unless you are referring to imputed interest, which would be a tough sell. Thank goodnes you have both gotten attornies to battle out the contract legalities. Guess who's gonna win that.... the attornies. One question I had was, irrespective of who's name the mortgage was in, you said that you were not in foreclosure, but close to. How were you going to qualify for a land/home construction loan anyway? Looks like if the buyer, if he were a truely good investor, paying on time on your mortgage, would have actually improved your credit. You also mentioned that 3 different attornies couldn't agree on what the contracts meant. Realize that attornies are people too, and that your better attornies with more knowledge and experience make more money than the freebie or Jimmy the Grunt types. if they have little experience in the CRE arena it is very likely they don't understand. Now, I haven't read your agreement that you signed obviously, but i am guessing that the two paragraphs you are talking about that don't agree with each other may be referring to 2 different buyers. Is it possible that one paragraph is referring to the investor and subject to, and the other refers to the end buyer who will acquire the property from the investor who will at some future time, obtain a new mortgage? I am curious as to the time frame between the signing date where you turned over the property to the investor and the time and language of the paragraph regarding the new financing that you referred to and the date of the suit and countersuit filings. I am kind of glad you have posted this, for it gives us a chance both to see the seller perspective and it drives home the importance of proper state specific documentation of a property purchase, and the importance of speed in filing, as well as the importance of professionalism and education.
Good Luck,
Shawn(OH)
We were going to pay off the mortgage with the sale... that's how we would qualify. Plus use the proceeds from the balloon note held on our equity to purchase the package and finance any remaining materials. The only way it would have worked for us is to have the first paid off immediately. The only reason for leasing back the house was to have a place to live while we built. We are builders, not real estate gurus. The property would have been close by and we could all work on it while we lease. It would have been great if the first was paid off right away. Being self employed is hard on the interest rate especially if you fall into a certain tax bracket. That was our main problem. To conclude, that was the plan and that was the understanding we had. I think he just got so greedy that he would say anything to get this land, and the house itself was insignificant to him as he never even did a walkthrough. The land development was going to be the kicker for the guy. Thing is I don't know how he would have done that either, without triggering our DOS as you people like to put it. Our mortgage company said we can apply for a partial lien split as long as they have equity remaining in the house and five. They do, about 60k from the last appraisal. It is an income to debt ratio problem for us. Believe me, if we can sell the house and five for even 20k less than FMV and the land at FMV than we will more than have our new home built. This one is a hand me down and too much memories that aren't great. Only got a mortgage to get the rest of the family off it. Would have been happier if didn't I think.
Anyway, we will see what happens. I am not going to worry about it anymore I suppose. The lawyers have it now.
At least spring is almost here and I can run through the forest again, one last time.
Angyatheart:
You might want to see if you can see the
trees thru the forest while you are running. It will give you a different perspective!
Best of Luck,
Jeffrey Adam
[addsig]