Re: If the dopey seller goes to the lender - Posted by JohnBoy
Posted by JohnBoy on July 27, 2001 at 07:52:42:
If a seller goes to the lender you may not just be able to deed the property back to the seller. What do you do with the tenant/buyer you have in the property that YOU have a contract with???
Wouldn’t it be better to add as much protection for yourself in the beginning rather than have to worry about it later IF it were to ever become a problem?
This isn’t about if a seller goes to the lender or if a lender calls a loan due.
This about having a problem that may develop where you end up with vacant properties where YOU couldn’t perform on your end of the agreement by keeping the payments current on the seller’s loan. If something happens to where the economy took a dump and you ended up with vacant properties that you couldn’t get occupied with paying tenants, there’s a possibility that some prosecutor may try to file criminal charges against you claiming you frauded the seller in some way by taking their property leaving them with NO recourse of any kind while leaving them liable for the loan.
If you took out a loan that you borrowered in your name to buy a property and later you defaulted on the payments for what ever reasons, the lender will foreclose and take the property back. You will ruin your own credit and may end up with a deficiency judgement against you, but you can’t be charged will a criminal suit because you didn’t make your payments. The lender had recourse to take the property back. It’s only a civil matter, not a criminal matter.
Now what if you went around borrowing tons of money from different people to buy a bunch of houses with. You somehow managed to get all these people to loan you money without having to give them any security as collateral. Then things went bad that was out of your control and you couldn’t pay any of these people back. Oh well, that’s life, right? Well, what if all these people starting screaming foul that you had scammed them all out of their money? Do you think it’s possible that you could face criminal charges for that? Anything is possible. It doesn’t mean it will happen, but it certainly could happen. IF it did happen, wouldn’t you want to be in a position to show that you didn’t scam anyone by showing they were secured by a written agreement that allowed them to at least get their property back since they are liable for the loan that is secured against the property?
Think about it. You get a seller to deed over their property to you where they are releasing all of their legal interest in the property over to you. You now OWN their property and no matter what ever happens they could never come back and claim any rights to the property. BUT, no matter what happens, they remain LIABLE for the loan that is secured against the property YOU now own that they have NO legal rights to?
IF something did go bad where you couldn’t perform of several mortgages you took over like this, is it POSSIBLE that this could end up all over the news where these sellers were all screaming scam where you took advantage of them by stealing their homes from them while leaving them stuck holding the bag on loans they remain liable for while YOU own their property and they have absolutely NO recourse to come back and claim any interest in the property? Do you think it is POSSIBLE that some hungry prosecutor that got wind of all this could decide to come after you and file criminal charges against you by claiming you somehow frauded these homeowners out of their homes???
WHO is more likely to look bad in this if something like this was to get blasted all over the media? The homeowner that ran into problems and could no longer afford to make their payments. Or YOU the big bad investor that has dozens of homes you own that you had acquired this way? What do you think this would look like in the eyes of the media and ever viewer watching this on TV???
Do you think the media is going tell the story the way it really is or do you think they’re going take it all out of context to dress up their story to make it look like these poor homeowners who were down on their luck were taking advantage of by this big bad investor that only had dollar signs in his eyes and didn’t give two hoots about what could happen with homeowners when you decided to stop making the payments on their loans???
Is something like this POSSIBLE to where this could happen to someone???
If this were a possibility, then would you rather go into court defending yourself where the seller was left with NO options to protect their interest on their loans in some way or would you rather be able to go into court a defend yourself by showing the sellers do have a way of protecting their interest on the loans they remained liable for?
We can all use trusts, corps and LLC’s to limit our liability all we want. That’s all great for protecting ourselfs in civil cases. But what we’re talking about here is the possibility of ever ending up with a situation where some hungry prosecutor decides to go after you filing criminal charges against you.
I’m no lawyer, but I don’t think all the trusts, corps and LLC’s would be able to shield you as an individual against criminal charges. Someone will be held responsible for those trusts, corps and LLC’s when it comes to criminal matters.
The least of my concerns is facing some civil suits to defend over this. Those corps and LLC’s can limit your liability for that. I’m concerned about adding more protection for myself to avoid any criminal matters that some prosecutor may get the big idea to go after me to set an example of.