…so much for your feedback. I did not have an escrow agent or atty do my lien, I trusted the REI and the original L/O buyer. Turns out, the REI posts to this list and appears to be very respected here (maybe you never really know who folks are in cyberspace?). A check at the courthouse would not have revealed the problem because the liens were all filed by the REI and he filed them all on the same day, just had someone else’s filed first. We asked for a copy of the note as soon as we found out about it, but he didn’t want to hand it over. When we got a copy, it even references our note, so I guess it was a setup from the beginning. We did have an atty for the foreclosure, I guess we need to find another to address these other problems. Anyone know a good atty for these type situations in Dallas?
I’ve recently starting reading posts on this site because I’m in the middle of one of these deals and would really appreciate some input. You guys really seem to know your stuff.
We responded to an Advo ad last year from a REI and put our house on a L/O that has since expired. As we didn’t want the house back, we agreed to a 6 month extension but shortly after we signed the extension, another REI became involved. He got a Warranty Deed from us and we got a DOT from him for the small amount of equity we wanted out of the house. Our note was due in 6 mos and the first mortgage was to be paid in the same time frame (out of proceeds from sale). The house was in need of repair, but the REI’s contractor did a lousy job and the house was in terrible condition at the maturity date of the note and the REI had not paid either note as outlined in the contract, although he did make the monthlies on the mortgage.
Almost a month after the maturity date, not having received our $, the repairs not completed and believing we were in the middle of a big mess, we looked into foreclosure and began the proceedings. It was at this time we discovered the REI had put another DOT on the house and filed it prior to ours without our knowledge. Now we have foreclosed on the house and are trying to work something out w/the REI since we don’t want all the hassle this has become. We haven’t heard from him in a couple of days, so we don’t know where he stands now.
The house was listed at $97K - $99K, the payoff is approx $57K, the second lien (we finally found out) is $20K, and our note is $5K. There was a 4th on the house ($7500) to the original L/O guy for repairs he did, but that was extinguished by our foreclosure. The current REI has told him not ot worry, he will get paid. The house is still in need of repair, although some repairs have been done (poorly).
Is this a normal practice for REIs to slip DOTs in without disclosure to the seller? Could the $20K note be bogus? Any thoughts on how to resolve this mess are welcomed!
From your post it sounds as though you have completed the foreclosure on your lien (“4th on the house … that was extinguished by our foreclosure”). However, that second was snuck in on you. From that, I conclude you did not have an escrow agent or company put on your lien. And you did not know enough to check in the land records office before it was recorded. If there was an escrow agent, they should have been instructed that your lien had to be recorded as a second or not at all. If you had an escrow person/company and so-instructed and they allowed your lien to be a third, you can go after them to remove the second by paying off the lender.
Probably you should get advice from an attorney, one who specializes in real estate. No, it is definately not normal for there to be another lien slipped in ahead of yours. Your contract with the investor should have specified that your lien was to be a second loan on the property. Probably the investor wrote the contract and did not have that in the contract. It is possible that the “slipped in lien” action is a violation of the law. I do not know that, not being an attorney. And, of course different states may have different laws on the matter.
A local attorney can advise you.
As a real estate investor, I hate to see sleazy people doing dishonest actions. You have been damaged to the extent that $ 20K of your equity has been moved over to the lender of the second loan. You may have other damage due to shoddy workmanship which will have to be redone. And may have reduced the value of the property. If I were you, I would never talk to that investor again. Have the investor talk with your attorney only. This person is dishonorable, and perhaps incompetent. I would hate to see you trust this person and get harmed even more by so doing.