Need some FAST help! - Posted by Kristy-AZ

Real Estate Investing Real Estate Law
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Posted by BOB H on July 23, 2004 at 11:55:21:

Kristy,
I think it is a plus for you the the judgment holder is gov’t acency.
They have no incentive to be a**holes like most private sector
collection agencies. It sounds like there is no significant equity in
this deal, so there’s no benefit to them in preventing the sale of
the property.

An offer of $500.00 or net proceeds from the sale, whichever is
greater, plus a payment arrangement on the balance from Mom
should be a slam dunk.

I would strongly encourage mom to let you handle the
negotiations - it takes the personalities out of the mix, and you
are in a much better position to negotiate a favorable outcome.
Do it in person, as JT suggests, if at all possible - it will be real
difficult for them to turn the deal down, with you sitting at their
desk.

Good Luck!

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Need some FAST help! - Posted by Kristy-AZ

Posted by Kristy-AZ on July 22, 2004 at 21:42:08:

Here’s the situation.

I am working as the REaltor on this one. I listed and sold the house, it’s in escrow (pre-foreclosure) got the pre-lim from Title Co last week. There is a judgement on the parents from 2000. The parents co-signed the loan for the kids.

The kids (who I am working for) did not know about this, the parents can’t afford to payoff the judgement (they have their own house) and the kids may end up having to pay to sell the house, which of course they won’t do.

I had asked the Title Co, last week if we could call the attorney and get a partial release, since the parents own their own home. She told me we could get the homestead exemption, but I was concerned, because you have to be the PRIMARY owner to get that exemption. She (title) said it would be no problem. Well…today I get a call from her, saying the parents have to be the PRIMARY occupants to get the homestead exemption, so we can’t do it and the judgement will have to be paid off.

So here I am a week away from closing, I have already put money into this deal as far as repairs that needed to be done and now I can’t get this judgement off my clients house. The judgement even has the parents address on it!And it has to do with the PArents company, and the defendant was an employee that was injured.

Will somebody PLEASE help me on this! Who do I need to call, and what do I need to do. The title company is not one I normally use, but is affiliated with my regular one. They all told me the escrow officer was great at this location, but now, I am begining to wonder, because I felt she was wrong in the first place.

Kristine, JT or anyone who’s dealt with this, please get me in the right direction here. I really need to close on this house too.

Thanks,
Kristy-AZ

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Re: Need some FAST help! - Posted by dave

Posted by dave on July 24, 2004 at 17:43:30:

“So here I am a week away from closing, I have already put money into this deal as far as repairs that needed to be done and now I can’t get this judgement off my clients house”

why would you EVER put YOUR money into a deal that:

  1. you don’t own
  2. you haven’t checked title BEFORE you put YOUR money in??

if the parents are on the deed, they and the kids are stuck. the only thing you can do is to try and discount the judgement which might be possible due to the fact the house is in preforeclosure. the judgement hold might be motivated to get something out of the deal instead of nothing if it goes to sale

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Re: Need some FAST help! - Posted by JT-IN

Posted by JT-IN on July 23, 2004 at 01:54:37:

Kristy:

I wish that I could ad more here, but Bob H. has pretty well summarized the best approach. The key element is whether the parents are “on title” as opposed to simply being a co-signor of the TD. If they are not on title, then the problem isn’t a problem at all… That is the first thing to check out.

Other than that angle, the Judgment Creditor has no doubt been served as a result of the foreclosure action, and it sounds from the private email that you sent me that the creditor is a Governmental agency. Many times with a pleasant phone call, or maybe a personal visit if possible, a partial release as to that property can be arranged. Try all your charm on them, and maybe they will relent. The idea here is that agencies like this one, and even State Revenue offices and the IRS normally do not intend on forcing someone into foreclosure, simply to clear their lien.

Time is critical, but stay cool and you can find a solution here… Wish you all the best on the outcome. Keep us advised.

JT-IN

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Re: Need some FAST help! - Posted by BOB H

Posted by BOB H on July 23, 2004 at 24:21:08:

Kristy,
A couple of questions -

You say the parents co-signed the loan. Are they on title as well?
If not, the judgment doesn’t attach to the kids property. If they
are on title, ask the title company’s attorney if there are any
conditions under which they would agree to insure over the
judgment.

Is this a short sale? If so, and especially if it is an FHA loan, the
existing lender will often allow a payment up to $1,000 out of the
sale proceeds to clear junior liens off title.

Lastly, if neither of the above apply, talk to the judgment holder
about releasing the kid’s property in exchange for a Note and TD
on the parents property. This should be an attractive solution to
him; he becomes a secured creditor on the parents house, without
homestead exemption issues, and he begins receiving monthly
payments from the parents, who are the ones responsible for the
debt. He’s not giving up much since his interest in the kid’s
property would likely be extinguished by the pending foreclosure
if he prevents the sale of that property.

Good Luck

PS: I wouldn’t be too quick to dig into the realtors/lender/sellers
pockets just yet. There are better, more equitable solutions
available.

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Re: Need some FAST help! - Posted by michael schindler

Posted by michael schindler on July 22, 2004 at 22:21:43:

Talk to the other realtor involved (If there is one) and pay for it as a credit from the realtor commission. Also, tell the new lender and see if they will kick in a lender credit. Do the same with the title company, they can be flexible as well. Close the house for less than everyone expected-but spread the loss between the parties involved and just get the house sold. 100% of something is better than 0% of 100% of nothing. (This is, of course, a response based on various assumptions). The title company will know how to credit this and that to get the numbers to jive. Also, ask the parents AND the kids what they can come up with BEFORE offering the proceeds from the people mentioned and hold them to it.

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Re: Need some FAST help! - Posted by Kristy-AZ

Posted by Kristy-AZ on July 23, 2004 at 10:24:12:

Thanks JT,

Yes the parents are also on the deed. I am going to be making some phone calls today. Hopefully I can get this taken care of. If not the kids are going to be so upset, and this house will not go through if they have to pay to sell it. They will just let it go to auction!

After talking with the mother last night, it sounds as if they are in financial trouble too.

I hope I can get this taken care of. It just make me so mad!
Thanks,
Kristy

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Re: Need some FAST help! - Posted by Kristy-AZ

Posted by Kristy-AZ on July 23, 2004 at 10:19:36:

Hi Bob,

Thanks for respnding. As JT points out, this is a government agency called The Industrial Commission Of Arizona. This judgement started 10 years ago. I talked with the mother and she says she has made payment arrangements with the ICA.

The parents are on title and this is not a short sale. The loan is FHA. There are a couple other judgements too from the HOA’s, but we knew they were there. We listed the property as high as we possibly could, got it under contract and the appraisal is just sqeaking by.

The amount of the judgement is $3,600. We are supposed to close July 30th. The auction date is August 24th, and if we don’t close on July 30th, the kids get hit with another months’s interest because it is an FHA loan. that would be another $1,000.

I am just so mad at this title co. because I questioned them last week on this issue. Then I asked her if we should be calling the creditor or the attorney for the creditor to see if we can get the property released. She assured me they could get the homestead exemption. Guess what…I was right, they were wrong!

The mom is calling the ICA today, to see what she can do. She didn’t seem willing to have me handle it, by getting an authorization from her. I’m afriad she doesn’t know what to do.

I’m really nervous, because this is a State agency, and not just some fly by night creditor. If you have any more suggestions, I would love to hear them.

Thanks,
Kristy

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Re: Need some FAST help! - Posted by micheleco.

Posted by micheleco. on July 22, 2004 at 23:49:14:

Also, see if they will sign over/waive the escrow overages for taxes and insurance if there are any. This depends on when you close.

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Re: Need some FAST help! - Posted by Kristine-CA

Posted by Kristine-CA on July 23, 2004 at 18:22:03:

Kristy: I sent a reply to your personal email, but I have another question. Did all four sellers fail to inform you that there was a judgement against two of them? Did they not know they were on the deed? Seems to me that you should be frustrated with them for not coming forward at the beginning. That’s the time that the numbers get crunched to see what’s needed to make the deal fly. Did they just hope the judgement wouldn’t appear?

And how much of a better offer would the sellers need to pay out everything without bringing cash to close? And, is there any available equity in the other property? Kristine