Your buyer needs to talk to an attorney. It sounds like there could be some liability on the banks part. They accepted the trust acting as trustee. Told the buyer everything was fine with the assignment and that he owns the home. The buyer then reinstates the defaulted loan and begins making repairs. Then a few weeks later the bank informs the buyer he does not own the home and they deeded the property back to the seller from the trust.
I would also be talking to the seller about how she is going to be held liable for frauding the buyers on this deal. Threaten her with criminal prosecution. That isn’t protected under filing BK. Maybe that will get her attention and she might deed the property back.
Why did you use a bank for the trust? You should have used your attorney or set up a corp. or LLC instead of going to a bank.
Hi, I am having a heck of a time with a transaction and I wanted to get some opinions on what I should do.
I put together a contract to buy a womans house who was in foreclosure. The woman did not want any money she just wanted to be done with the property. I originally put together a contract to short sell the property. The bank did not accept the short sale so I went back and agreed to take over her mortgage and bring the loan current with a repayment plan. She agreed and we set the transation up thru a land trust. Instead of me taking assignment of the land trust I found an investor and I gave him my interest in the deal in exchange for 6,000. He would pay the arrearge payments on the bank loan and take-over the house and fix it up then sell it.
I had the seller fill out the land trust paperwork and I took it into the bank. I even agreed to give the seller 1000 for her trouble. I had my buyer pay transfer tax and the assignment fee and fill out the necessary paperwork to get the assignment.
Everyone got paid, me, the bank, and the seller, deal is done.
But… The bank maybe 3 weeks later calls the seller to verify that she wants to transfer the property in the assignment. The seller says “no I did not want to tramnsfer the property” The bank gets nervous and deeds the property back to the seller! My buyer had already began rehabbing the house because he believed that he owned the house. The bank (which I happened to work for in a different department) tells me they believe I fradulently transffered this lady’s house. They fire me and tell me almost 5 weeks later that she still owns the house. I tell my buyer and he is upset because he worked on the house and paid the bank 1 additional payment in addition to his original reinstatement payment. I call the seller and she says that she thought I was going to buy the house outright even though she has signed paperwork that says the mortgage would stay in her name. She says now she doesnt want to sell because the house is worth more than I was buying it for. And she owes about 50k in credit card debt and may file bankruptcy.
Meanwhile, I talk with an attorney and we are trying to figure out what the next step should be including my buyer. Should I just use some of my cash and settle with him (yuck!!) or should I talk to the lender about possibly buying the note? or should I file a lis pendens to stop her from being able to sell the property and try to figure a way to force her to sell?
Also, since this has happened my buyer did not make the last mortgage payment and the house is back in foreclosure. I can make another agreement with the bank but not until I have control pf the property again? ANy suggestions would be GREALTLY appreciated!!!
Thanks
p.s The bank that did the land trust and the foreclosing bank are not the same bank.
Sounds to me like the bank is guilty of doing to your buyer the same thing they accused you of doing to the seller. Only the bank is the one who is wrong.
If I understand this correctly, your buyer filled out the paperwork to have him assigned the seller’s beneficial interest in the trust. If that is the case and that paperwork was properly filled out and excuted, then the seller is no longer the beneficiary of the trust. Your buyer is. Once your buyer became the beneficiary of the trust, then the only way the bank can deed anything to anyone is by the instruction of the beneficiary, which is your buyer, NOT the seller. This is assuming the bank is the trustee of the trust.
If the buyer has been assigned the beneficial interest of the trust then the bank has no authority or right to deed the property to the seller. The seller has no say in anything at this point because the seller no longer owns any legal interest in the trust. She assigned it to the buyer. The buyer needs to file suit against the bank for deeding his property to someone else without his consent. The bank violated and abused the buyer’s trust and rights by taking matters into their own hands and deeding away his property!
This is assuming the beneficial intrest was indeed properly assigned to the buyer. If not, then the buyer was an idiot for not making sure he was properly assigned the beneficial interest before paying any money out and doing any repairs before legally having been assigned the beneficial interest.
But he was legally assigned the beneficial interest, then the bank had no authority to deed the property back to the seller. It doesn’t matter what the seller says to the bank. She no longer owns a beneficial interest in the trust once she assigned her interest to the buyer. It also sounds like the bank may be guilty of interferring with a contract. Unless you the paperwork wasn’t properly excuted where the buyer wasn’t assigned the beneficial interest like everyone assumed.
Was the buyer assigned the beneficial interest by the seller or not? Was it properly executed or did the bank acting as trustee of the trust stop everything before the buyer was actually assigned the beneficial interest?
Did the bank stop everything before the actual assignment was finalized?
Why would you take the trust paperwork to the bank?
How does the bank have any right or authority to deed anything back to the seller?
Did you set the bank up as trustee of the trust?
The trust should have been set up with you, not the bank. You have control over the trust as to who is the trustee. If the seller assigned their beneficial interest of the trust to you, and you had that notarized, and you assigned it to your buyer, then the bank has no authority to deed anything to anyone. The only way the bank can deed anything is if the bank is the trustee of the trust and the beneficiary of the trust instructs the trustee to transfer anything. Once the beneficial interest has been assigned then only the new beneficiary can instruct the trustee of the trust to transfer anything.
I don’t understand what you did here that would give the bank any authority to deed anything to anyone.
Exactly what does the bank have to do with any of this pertaining to having any right to deed anything???
Based on your post it also sounds like this bank is the same bank that has the mortgage on the property. Is this correct?
Let me be a bit clearer on the bank’s part. The bank that I set up the land trust with took all the paperwork to put the property into the land trust. They then accepted a recorded deed into trust that I had recorded. They accepted the fee to pay for the land trust setup and the accepted the assignment paperwork but before they acknoledged the assignment they called the seller to ask if she meant to assign her interest. She said that she was NOT assigning her interest and was NOT selling her property. The bank got scarred that something fradulent was happening and they quickly deeded the property back out of the land trust and back to the seller. But this was about 2-3 weeks after they had the assignment and they had told my buyer that everything was fine with the assignment so he began working on the property.