Posted by John Merchant on July 03, 2004 at 11:26:40:
Jake has some very good advice here, as it’s probably cheaper to settle than litigate.
Was told I might get SUED someday!!! (long) - Posted by Ticked off
Posted by Ticked off on June 19, 2004 at 08:43:25:
Sorry for not using my real name but this pertains to ongoing litagation and you never know who might read it and use it to bite me in the backside.
I’ve understood from day one that this might happen but it still sucks.
About 2 years ago I bought a house “subject to”. Used a short contract that said I took the place subject to 3 mortgages, a mechanic’s lien plus I paid the owner’s 8 grand. Deeded to a trust with me as trustee.
I spent 10 grand fixing the place up and sold it on a CD with 10K down and about 400 a month cash flow. CD buyer refinanced and paid me off earlier this year (I HATE it when that happens!).
The mechanic’s lien was from a previous buyer (this contract between the seller and him was never disclosed to me) who had done repairs to the place before closing (without any agreement with the owner) and got shut out when his financing was denied. He foreclosed on the mech lien as well as sueing the previous owner for unjust enrichment, breach of contract yadda yadda all in one suit. Since the lien was against my property I financed the defense and after a year (and 10K in legal fees from me) the mech lien was thrown out but the other elements of the suit were not. I bade the former owners farewell as the balance of the suit did not involve me. Met with them and the attorney and got them on track. Later I found out they refused to pay the attorney and he withdrew.
Fast forward to now almost a year later and they have another attorney who is coming after me saying I owe them 20k (the amount of the mech lien) because it was thrown out, and I made an “unconsionable profit” on the home. No mention of course of the 20K I spent on attorney’s fees and rehab(after all accounting including 20K I spent,I made about 30K). Former attorney can’t rep me as he “in reality represented the previous owners” even though it came from my wallet (I understand this, no problem here) but now I have retained another attorney and have to start all over.
Bottom line is (only my opinion) even though these people were so thankful to me at the time, as I saved them from foreclosure and getting nothing out of the house, their memory was short.
They ignored the legal situation they were in, got themselves in a bind and now are looking for someone elses wallet to dig into for their defense.
Just relating the facts as some “cold water of reality” for others. Be careful out there.
TO
Re: Was told I might get SUED someday!!! - Posted by William Bronchick
Posted by William Bronchick on June 21, 2004 at 09:33:02:
The reality is, you were right and they were wrong. The reality is also that, as you correctly surmised, people have short memories when it comes to foreclosures.
The important thing is to have good disclosures, but more importantly, make sure the parties you are dealing with REALLY understand what it is they are giving up and/or getting in the deal. And, using a corporate entity, such as an LLC or corporation, can help limit your liability in these deals. Even so, this is America, land the of the free contingency attorney who can cost you $20k defending yourself against nonsense.
The good news is that you still made a sizeable profit. But, it is a good “heads up” to people who deal in foreclosures - these kinds of things happen more often than you think.
Re: Was told I might get SUED someday!!! - Posted by jake
Posted by jake on July 03, 2004 at 01:58:16:
I’m no attorney - just putting on my business cap here.
Have you considered just offering him a settlement of 10,000. It sounds like you would have still made a nice profit if you do - and it would put an end to a legal dispute. It would also be less of a headache than hiring an attorney and starting over.
I’d start low with the expectancy of getting to 10,000 as final offer.
The contractor will be saving legal costs as well - may be a win / win for both parties. Just make sure you have an attorney look over the settlement document to make sure it releases you from any further obligations before you give him a dime.
Jake