Posted by REI Mentor on June 01, 2003 at 24:09:23:
Jack told you correctly regarding Agreement for Deeds and equitable title. And yes, talk to a good R.E. Attorney ASAP who can let you know when and how your state ‘awards’ equitable title in the case of a default.
In my state if the tenant/buyer does not have at least a 20% equitable interest in the property (in other words, they have not paid down the mortgage or Agreement for Deed enough to be able to say that there’s only 80% of the property value left to pay on the loan) they have no recourse and can be evicted. They don’t even have to be foreclosed on in this case, which is good since the FC process is often much much longer than eviction.
The only other thing I would be wanting to know right now is: WHERE IS THE ACTUAL DEED?
If the original homeowner was smart he made sure the deed got put into escrow and didn’t actually give it to the investor. Also, if he was smart he made sure the Agreement for Deed got recorded. These are the things you need to find out.
OK, are you realizing yet it’s time to get that R.E. Attorney?? You don’t hook up with that attorney ASAP and this deal is gone gone gone.
Good luck,
REI Mentor
Gave away deed & won’t pay mortgage - Posted by Momgns
Posted by Momgns on May 30, 2003 at 16:19:57:
Help?
I’m trying to purchase a home that the owner handed over the deed to a real estate investor who promised to pay the mortgage. Long story short, he’s not making any payments. The house is vacant.
Do the homeowners have to get the deed back so I can purchase their home? The investor refuses to communicate with the homeowner. What are my options?
Re: Gave away deed & won’t pay mortgage - Posted by REI Mentor
Posted by REI Mentor on May 30, 2003 at 16:35:24:
Here are the questions I have:
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Is the house in foreclosure? If so, where in the foreclosure process is it (how close to sale)?
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Did the investor record the deed?
If the investor did not record the deed, that deed is worth NOTHING, zero, zip. Ye that records first wins. You need to get to your county recorder’s office to see whether the investor recorded the deed. Frankly, the investor may be trying to either sell the deed or flip the deal to another investor. BUT, if you can record first, guess what? There will be a cloud on the title when the other investor goes to close. Hehe, I’ve done that a couple times and I’ve ALWAYS wished I could see the look on their face when they find out.
Anyway, you need to move fast. Figure out what the HO is willing to do SHOULD you be able to get the thing tied up - and don’t make any promises to the HO. At the same time you need to have your ducks in a row too. Find out exactly where this thing is in the FC process (if it’s even in FC) and figure out your exit strategy. Don’t buy a house just because a HO doesn’t want it - make sure there’s a deal there. I always always work to create a win/win but “I ain’t the Red Cross”. Get the idea?
Let us know what you find out at the recorder’s office. If no Quit Claim Deed (or Deed of any kind) has been filed you will need to move fast. But DON’T FORGET to check for any additional liens, judgments, tax liens, etc. against the house while you’re there. Again, don’t buy a lemon disguised as a deal.
Good luck,
REI Mentor
Re: Gave away deed & won’t pay mortgage - Posted by Nate(DC)
Posted by Nate(DC) on May 30, 2003 at 16:33:49:
If they gave the investor a deed, the investor owns the home. They do not. So if you wanted to buy the home you would have to deal with the investor, not them, since they are not the owners.
NT
Re: Gave away deed & won’t pay mortgage - Posted by Brent_IL
Posted by Brent_IL on May 30, 2003 at 16:33:26:
You’re the one who should communicate with the former homeowner. You need to find out how they secured their deal with the investor. If they signed over the deed, the investor is the owner. If they have a mortgage securing their position, you can decide if it’s worth going after.
Faced with possible litigation, the investor may just deed it back.
No doubt he was a new CRE investor that ignored counsel to have some cash in reserve.
Re: Gave away deed & won’t pay mortgage - Posted by Momgns
Posted by Momgns on May 30, 2003 at 16:41:20:
The house is not in foreclosure at the moment. The deed was recorded as an agreement for deed. However I read the agreement & in the contact he is supposed to pay the mortgage. At the moment he is in breach of contract because he promised in writing to pay the mortgage. Does that make the deed null & void?
Re: Gave away deed & won’t pay mortgage - Posted by Jack
Posted by Jack on May 30, 2003 at 16:53:10:
An Agreement for Deed is not really a “deed”. It’s an installment sale document. The real deed is still in your seller’s name if this is the typical Agreement for Deed type sale. This means that your sellers still own LEGAL title, and the investor owns “equitable title”.
However, for your seller to be able to sell to you, they need to get back “equitble title” from the investor. To do this, they must follow the legal procedure for forclosing or forfeiting an agreement for deed in your state, according to state’s statutes.
In my state, it’s simple, and only takes a few days. But you will have to find-out how it’s done in your state. Or, better yet, you can contact the investor, and bribe him to release the agreement for sale. Maybe he would take $100 to $500 to release the contract, or assign it to you.
If you are not savvy in these matters, you should encourage your sellers to seek legal advice, ASAP.
Re: Gave away deed & won’t pay mortgage - Posted by Momgns
Posted by Momgns on May 30, 2003 at 17:13:11:
Thanks for all the great info. I live in Florida, so if anyone knows about the procedure for foreclosing on an agreement for deed in the state of Florida, please let me know.
Good advice given… however - Posted by JT-IN
Posted by JT-IN on June 01, 2003 at 01:52:01:
Moms:
Follow the good advice given in the above posts, and this should be able to be resolved w/o a huge issue. What the investor is likely doing is hoping to get it rented/sold on a L/O, with some Option money, and use those proceeds to cure their default in the agreement, of back mortgage payments.
With all that said, if it were me attempting to determine where the investor-Buyer in the installment sale actually is in the transaction, I would structure an agreement with the “Legal Owner” of the property, which will illustrate what will transpire when you… or they, or the combination of the two of you… evict, foreclose or recind the equitable interest of the Investor-Buyer in this deal.
No point in going the mile, and then having the legal owner tell you, “we have changed our minds about selling the property”, etc, etc. You may want to get a Deed from them to you, (subject to), before you go the nine yards on this deal… If they are willing, I would be providing the document for them to sign… in front of my notary. Once that has occured, and assuming there is enough equity in the property to make all this effort worthwhile, then I would take charge of this deal and resolve the transaction for the legal owner. If you pursue it this way, also get the legal owner to sign a limited power of attorney as to the real property, which will allow you to legally act in their stead as to the eviction or foreclosure efforts. Again, only do so after doing your due diligence and determining that thsi is a deal you want to run with… after ejecting the bozo investor. Be a gorilla in this jungle, if the deal dictates…
Just the way that I view things…
JT-IN