Sub-2 gone wild - Posted by Gary

Real Estate Investing Real Estate Law
1

Posted by Rich-CA on January 28, 2008 at 18:25:31:

I agree. Its mot like the foreclosure would end up on your credit report. I would ask the seller to pay to finish the work or else you will have to turn the property over to the bank which would trash their credit.

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Sub-2 gone wild - Posted by Gary

Posted by Gary on January 25, 2008 at 17:13:41:

After many years so successful RE investment, I finally encounter something that I don’t think can happen. Here is the summary. What do you think?

  1. Purchased property sub-2 via assignment of contract two years ago. The deal was closed at a title company with no title insurance purchased. The seller holds a $10K unsecured note, payable when the house is sold to a 3rd party

  2. I have a POA from the seller and pay the mortage to the bank directly.

  3. I leased the house to a 3rd party over the last two years. The tenent moved and I plan to sell the house.

  4. While the house was vacant, the previous owner broke in and hired someone to remodel the house. (This went unnoticed for couple weeks until I was notify by the property manager. obviously I omitted a lots of info here. It took a while and some police work to figured out what happened)

  5. The remodel was 50% complete when we found out about this. The prevous owner admitted they were remodeling the house because they believe they still own the house. Their reason being the wife had forged her husband’s signature on the deed/docs. The warranty deed was notorized by the assignor (the original buyer).

  6. Policy was called in and their claim dismissed. The title company also claimed everthing is ok from their prospective. Because of lack of evidence, the police didn’t prosecute them but they were listed as the main suspects if anything were to happened to the house…

Now, it doesn’t make financial sense for me to finish the remodeling and sell it given the current market enviroment. The question of the validity of the title also caused me not wanting to spend anymore money on it. I was thinking about letting the house go back to the bank and cut my loses.

What do you think? Thanks for your feedback in advance.

Gary

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Re: Sub-2 gone wild - Posted by Natalie-VA

Posted by Natalie-VA on February 05, 2008 at 11:10:26:

Just a couple of thoughts…

If the title company says all is okay, I would make sure that they’ll insure title for the next buyer.

Also, the original buyer shouldn’t be a notary for a contract that he or she is a party to. If I were the original seller and wanted the house back, I would challenge this. The title company should have notarized the signing of the deed.

–Natalie