If the seller can claim this as her homestead (does the zoning affect that?) then I’m not sure why you’d be worried about alerting the judgement holder as to a sale. If the seller is behind on their loan, which is presumably in superior position to the judgement, then the judgement holder has nothing to lose, and everything to gain by selling to you at a discount, since they would likely be wiped out by the foreclosure of a superior lien. In addition, in Florida (my state), if someone clams homestead on a property, then in most cases, a judgement holder cannot foreclose on their lien. They can prevent a sale to someone else without being paid off, but they can’t force one to be paid off, as I understand it. You may want to see if Texas is the same way on this.
It seems that this lien holder is in a particularly weak position. Rather than worrying about “triggering them to believe there is a sale about to happen”, I’d probably be looking to do exactly that, and explaining to them in a gentle way that they can either sell to me now, at a discount, or get nothing. “Half a somethin’s better’n all a nuthin’” is how I’d put it, based on the information I have to work with from your post.
Secrets of Negotiating a Judgement Release ?? - Posted by Steve C (TX)
Posted by Steve C (TX) on July 19, 2001 at 23:28:07:
I am trying to negotiate the purchase of a small commercial property with a judgement lien against it. The amount of the lien is about $7500. The seller is 4 months behind on the private loan and $12,000 behind in taxes. I can assume the loan and possibly make payments on the back taxes, but this lien is the wildcard. I’m sure there are some experts who have had to negotiate a discounted payoff of judgement without triggering them to believe there is a sale about to happen. What is the best way to approach the co. that innitiated the judgement on the building?
A little wrench in this deal is that the seller has claimed the property as her homestead (yes, there’s a bed and stuff in it). That may allow her to sell for less than the total of the loan + back taxes + lien, but I’m not sure.
BTW, the private loan balance is $114,000 with payments of ~$900 per month. The building will sell for $180,000 or rent for $2500/mo or more.
A few years ago I managed to get releases from the property in pre-foreclosure under very similiar circumstances. It had 7 liens totalling $375K. I got the property ony (not the person) released for a token amount of $5K.
My best shot under the circumstances would be to impress upon the judgement holder that his lien security will be extinquished by the forthcoming foreclosure on the 1st mortgage, assuming the judgment is a junior lien.
Therefore after the foreclosure all he’ll have left would be an unsecured obligation ONLY against the person. I’d offer a token amount for releasing the lien from the property (but still keeping an unsecured lien against the person.) I’d offer very little, but expect to pay under 5-10% of face value for the judgement.