Posted by David Krulac on March 08, 2007 at 18:12:17:
if you burn down a whole block worth $20,000
? re stripping house 2 days before Sheriff’s Sale - Posted by Richard
Posted by Richard on March 07, 2007 at 20:07:44:
Hi all,
I’m not a big-time investor, but I have bought and resold three houses over the past five years, and I also have two rental houses.
A guy who lives across the street from me is set to have his house go to Sheriff’s sale on Friday. He knows I am an “investor”, and he offered to sell me EVERYTHING in the house for $500, and help me move it!
This includes all the appliances, fixtures, doors, toilets/sinks, window screens (16 of them), garage door opener, hot water heater, etc. He even offered to help me unhook the air conditioning unit if I can find a forklift!
The house is a 2002, and its in great shape. He’s just mad at the bank, the Sheriff, and the rest of the world!
I’m having a hard time finding a reason not to do this. It won’t affect the amount of any possible deficiency judgment, since the bank is probably going to be the only bidder and will bid close the value of the house (the mortgage owed is close to FMV). Plus, its my understanding that the deficiency judgment cannot exceed the sale price of the home versus the amount of the mortgage, so he’s not going to lose anything more or less as a result.
2 Questions:
Are there any repercussions against him for doing this?
Are there any repercussions against ME for doing this?
I could use the stuff to replace some of the older things in my rentals.
THANKS! Wow…I may be more confused now… - Posted by Richard
Posted by Richard on March 08, 2007 at 09:22:13:
Thank you for the responses - that is what makes this site great! I see there are some gray areas here, and a difference of opinion on what is the right thing to do.
I don’t want to beat dead horse, but I am still uncertain about some things:
-
Is this “stealing”?
I would use a sales contract (for regular goods, not real estate) for the purchase of the items. What difference would it make if it was two days before the sale or two years? Lets say the guy wanted to remodel his kitchen, and sold me his old kitchen stuff, then ran into financial difficulty (the same one that led to the foreclosure)and couldn’t finish it? Would I have to give everything back??? I just can’t see how any bank, insurance company, police, judge, jury, or anyone else could ever call this stealing…he still owns the property when he sells it to me…? -
What about the deficiency judgment, and the concept of “wasting”?
I’ve walked through a pretty good number of pre and post foreclosure houses, and I often see appliances gone, holes punched in every wall, carpet and sub-flooring saturated with urine, “homemade” electrical wiring, etc. etc. etc. Is this “wasting”? Does it affect the sales price?? How is this different than the owner selling me stuff? Is someone suggesting that if I buy carpet from this guy I’m a thief, but if he lets his dogs urinate on it then its OK??
Its my understanding that the defaulting homeowner is ONLY liable for the difference between the sales price and the amount due on the mortgage, and the banks aren’t going to go after him just because the deficiency judgment is $26K instead of $22K?
- I don’t see any difference between doing what I’m suggesting and a “short sale”, which everyone seems to love on this site?
The bank is taking a loss one way or the other, and the defaulting homeowner is subject to a deficiency judgment. To the bank, it nets out the same? Isn’t a short sale “stealing” from the bank and causing them to write off a portion of the loan that they are legitimately owed? How is this any different, or more/less ethical, than what I’m suggesting?
I’m not trying to be combative or argumentative, and I really do appreciate everyone’s insight!!!
Thanks again!!!
Not recommended - Posted by JT-IN
Posted by JT-IN on March 07, 2007 at 22:46:01:
Richard:
While all the other respondents have given you some moral gobbledegoup about “thou shalt not steal…”, here is the real reason why YOU should not consider participating in this striptease act with your neighbors blessing.
If by some chance the neighbor had let his homeowners insurance lapse, and the Lender has placed “forced placed coverage” on the property, then they may be able to file a claim directly against the insurer. Yes, the insurer will pay the claim, after having a police report or private inquiry completed to determine who was at the hands of this equity reduction task. When the ins co pays out a claim, they will surely come after you, not criminally, but civilly for repayment of their loss in the claim. If they do so, you will be found liable financially for the reduced equity and damages. You will then have to pay…
So forget about all the moral objections raised… It is simply a bad idea on this count alone, if by some chance the Lender has acquired insurance in their name. If they are simply an additional insured, as most lenders are on any homeowners policy, they would NOT be entitled to file such a claim, and in that instance you likely have no worries.
However, the bottom line is, what the heck is the stuff worth…? Not near enough to place yourself at risk in the middle of this potential time bomb.
Just the way that I view things…
JT-IN
? re stripping house 2 days before Sheriff’s Sale - Posted by Dave T
Posted by Dave T on March 07, 2007 at 22:38:02:
Richard,
Let’s say you do this. Your friend strips the house, you buy everything he removes from the house.
Let’s say that your friend did such a good job that no one outbids the bank at the foreclosure auction, and the property goes back to the lender.
The lender has someone give an as-is appraisal then lists the property for sale at a price that reflects the current condition. You make an offer well below ARV and it is accepted. The bank then files an insurance claim against the PMI carrier for the deficiency amount. Your friend gets a judgement for the deficiency, which includes the cost to replace everything he removed and then some.
Now, after you own the property you replace all the stuff you purchased from the disgruntled homeowner and flip the property for a tidy profit, or hold it for a decent rental income.
Sound like an opportunity?
Re: Oh Boy - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on March 07, 2007 at 21:49:32:
Are there repercussions? Are there ever.
Now lets see. If the loan is federally insured you can do some time in a federal prison. I hear they are pretty nice, what with computers and so on.
If you read the mortgage note that this guy signed you will note that most likely the property and all "real’ improvements constitutes the security. This would include anything that is attached like toilets, light fixtures, windows and screens, Etc.
Sounds like this guy is willing to steal this stuff from the lender, and you are willing to conspire to help him. There are several other charges that you risk doing time for if the issue is pressed, but you get the idea.
Stripping House - Posted by clint
Posted by clint on March 07, 2007 at 20:29:03:
Well Richard,
There are two schools of thought.
- It’s his house,and will be his house, contents included until the bank ‘officially’ owns it. So yes you could strip the house.
- Morality. What does your heart tell you? If you have to ask for clarification, it’s probably wrong, and you probably know that, and are seeking justification.
I am a firm believer that if you do good it will follow you, if you do bad, it will follow you, hunt you down, wait till you are on a back road, and blow out all four tires, and suck the life out of your cell phone battery at the same time!
do the right thing,
Clint
Re: ? re stripping house - Posted by dealmaker
Posted by dealmaker on March 07, 2007 at 20:23:37:
I believe the legal term is “wasting”, at least that’s the term when it’s between landlord and tenant. Since he’s talking about removing FIXTURES I’m pretty sure the same law would apply as the mortgage applies to the fixtures as well as the land.
You already know this guy is a snake. So when he gets caught what’s to stop him from saying he knows YOU did it and that he never took any money from you.
On the other hand since you’re willing to steal these items from the lender why not just go steal them now and tell him to go pound sand?
dealmaker
Re: THANKS! Wow…I may be more confused now… - Posted by DCO
Posted by DCO on March 10, 2007 at 10:02:32:
The law calls this a fraudulkent conveyance, at least as to any fixture. Personal property is treated differently - the seller can dispose of that as he wishes (barring unusual circumstances). The bank could assert a claim for damages if the property incurs damage as a result of your removing fixtures + for the price of the fixtures themselves. You would also be out $500 + your hard work in tearing up the place.
Re: THANKS! Wow…I may be more confused now… - Posted by Sgt.Sausage
Posted by Sgt.Sausage on March 09, 2007 at 16:24:39:
Ain’t it funny how greed can turn us into morons:
==> don’t see any difference between doing what I’m suggesting and a “short sale”
The difference is, in a “short sale” the deficiency is negotiated between you and a representative of the bank. They are fully aware of what is going on and must actually approve of the transaction before you execute it.
==> The bank is taking a loss one way or the other
One way: they authorize it, they sanction it, and they agree and are aware of it.
The other: You are stealing it out from under them, without their knowledge.
My moral compass allways leads me to put myself in the other person’s shoes. If I were the bank, and someone did this to me, I wouldn’t like it very much … would you? There’s your answer. If you wouldn’t like it being done to you, then don’t do it.
Period.
Funny how our greed gets in the way of our common sense.
Another successful debate… - Posted by JT-IN
Posted by JT-IN on March 08, 2007 at 09:40:40:
We have confused you more than helped… LOL
-
The contract idea could be invalidated, especially since you have prior knowledge of his circumstances. Not that it will likely be, due to the fact of what amount of $$ is at stake here, (10-20K versus 110-120K). Again, I wouldn’t do it for the sake of "how much is your upside going to be here…? Not enough to stick you finger in the socket to test if the electric is really turned off…
-
The Lender will most likely take a def judg, and that is that. whether they do or not isn’t part of this situation, as far as I am concerned. The amount of the judg isn’t important either… really.
-
Big difference between this and a short sale. One is with consent, the other is NOT. Rationalization doesn’t make the two options equal one another. If you agree to sell me your new Lexus for 5K, that is your perogative. If I take you Lexus and leave you a 5K check, are you supposed to just say, “He bought that car fair and square…” Of course not…
Not that nay of that helps the confusion factor… but just my views on the subject. And I certainly do not agree with any that espouse the “stealing” issue. I just think it could be way more trouble for you than it is worth; period.
JT-IN
Re: Not recommended - Posted by redave
Posted by redave on March 08, 2007 at 11:27:37:
He purchased the personal property from the homeowner for value, and has the cancelled check as proof. He’s a holder in due course, or whatever that terms is, he’s clean.
JT, I stole your mini-fridge … - Posted by Redline
Posted by Redline on March 07, 2007 at 23:47:51:
and I made some modifications.
Check it out, hope you like it!
http://www.metacafe.com/watch/445498/robotic_beer_launching_refrigerator/
Last one, I promise! Thoughts??? - Posted by Richard
Posted by Richard on March 08, 2007 at 20:00:28:
Can anyone define when something like this reaches the point of being criminal or subject to civil suit?
If I offer to buy one window screen from him for $5, I’m I engaging in criminal fraud? What about 2 screens? Or 2 screens plus a beat up bedroom door?
Also, if I offered him the money last month? six months ago? one year ago?
I realize its a “gray” area in many ways, but there has to be a black/white rule somewhere, or anyone who sells an old appliance for scrap when they remodel their kitchen is subjecting the scrap dealer to federal prison for mortgage fraud…
Surely Ed you can site case law here - Posted by JT-IN
Posted by JT-IN on March 07, 2007 at 22:16:09:
Ed:
Please provide some evidence of a homeowner being charged with such offenses. There must be multiple cases for you to choose from, since you state this so emphatically and what seems to be first hand knowledge.
JT
Here we go again… - Posted by JT-IN
Posted by JT-IN on March 07, 2007 at 21:46:07:
dm:
Come on now… How can this person STEAL what is already HIS…? We have had this same conversation a couple of times now… and there is no criminal activity here, as you imply; (aka STEALING). The mtg contact may state that you cannot do such things to the property, but isn’t that the same doc that states that you MUST pay you payments timely…?
Yes there is a moral issue here, and I am not suggesting anyone in fc do such a thing. But if they decide that it is right for them, for various distorted reasons, that is their perogative.
I would challenge you to prove that there is anything legally wrong with a homeowner doing so with their own property, prior to a sheriff sale. Leaving all morality out of it… now, which may be difficult for you. I doubt that criminal defense would ever be your calling… the shades of gray are difficult to pick out of a black object… LOL
Anyway, I really don’t know why I am writing this post except that I just can’t let it stand that some newbie may see this and surmise from your post that if someone does the “wasting” thing to their own property that somehow they might end up in jail. I really can’t let that idea stand unchallenged, as it has potential to do more harm than good… IMO.
Just the way that I view things…
JT-IN
Re: Not recommended - Posted by JT-IN
Posted by JT-IN on March 08, 2007 at 14:12:04:
Dave:
Maybe… Maybe not. If it is NOT, the aggrivation factor could exceed the benefit factor by quite a margin.
It simply may not be as cut and dried as you think; contract or not. If the Lender would happen to have forced placed insurance and be “the insured”, then I think the equation is considerably different than you mention, the minute that a claim is filed for damage, vandalism or theft. I would bet that a good Atty would have the recipient of the goods “begging” to want to bring the old sink and other junk back… I doubt that some piece of paper saying that the items destroyed totaling a claim for 10-20K, were actually purchased for $ 500 bucks… Doubt that it would hold much weight in that case.
Odds may be just as good that they wouldn’t pursue it either. The only thing that I am relying on is this… Having seen ins cos that have had to pay out a claim of a few grand, they are usually willing to spend 20K in expenses just to get that back… and broadcast the message along the way… “You better not tread on us”. Just something about that industry and THEIR dollars that they hold dear to themselves.
Just the way that I view things…
JT-IN
That is cool Redline… - Posted by JT-IN
Posted by JT-IN on March 08, 2007 at 14:21:02:
Where can I buy one… or are you getting one for Xmas…? Either way, I am in … LOL
BTW: Do they have the model that chucks chocolate chip cookies, too…? The VO&7 wouldn’t make it across the room in one piece…
Re: Surely Ed you can site case law here - Posted by Wayne-NC
Posted by Wayne-NC on March 08, 2007 at 09:44:28:
JT, wouldn’t that be the same as trying to justify the DOS clause? It’s there should one decide to enforce it is my point. Not the legality. I’m sure there is case law somewhere one could site if taken the effort to find it. Would you bet against that possibility? It may be very obscure but it most likely is there. Whether it is actually enforced on a regular basis or not is another issue. Is there any validity to my thinking? Or Eds for that matter.
Re: That is cool Redline… - Posted by Redline
Posted by Redline on March 08, 2007 at 18:16:21:
“The VO&7 wouldn’t make it across the room in one piece…”
LMAO … now THAT’S funny !