Bill, did I screw-up my own title? (long) - Posted by Jerry

Real Estate Investing Real Estate Law
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Posted by Jerry on September 05, 2003 at 20:11:36:

Thanks, Bill. That’s what I thought.

I didn’t know how to keep it short without possibly leaving something out that was important, or being unclear. When I finished typing it I thought it was way too long. I appreciate you going though it.

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Bill, did I screw-up my own title? (long) - Posted by Jerry

Posted by Jerry on September 05, 2003 at 18:00:32:

I (my corp) bought a house on land contract about a year ago. It had (and has) an underlying VA loan, and no other encumbrances. I got the land contract signed, notarized, and recorded, and all was well.

However, I also got the sellers to deed the property into a land trust with me as trustee and my corp as beneficiary. I had them sign an assignment of beneficial interest to my corp, which I am keeping in my file cabinet in case I need it when my buyers refinance and cash me out. I also thought it would be wise to hold title in trust for the safety this would provide from any future liens.

So, now I’m in limbo with my county recorder! The deed to trust was recorded, followed by the land contract. Well, this was pretty stupid on my part. Of course the land contract is invalid, because the sellers can’t sell something they no longer own. The trustee of the land trust owns the property, not the prior owners. So now this is the situation:

  1. titile is held in trust with me as trustee and my corp as beneficiary.

  2. I have the “assignment of benef. interest” in my file cabinet.

  3. There is an invalid, recorded land contract between the sellers and my corp.

  4. The recorders office found this inconsistency, and has sent me a letter stating that the land contract is invalid, and that I need to correct the situation or risk losing my opportunity to appeal property valuation and risk penalties if the property taxes are not paid in a timely manner. (I’m not very concerned about these things, since my corp is really the owner and I’m paying all the taxes)

  5. the main reason I used a land contract is because it’s a VA loan and there’s no DOS violation.

I’ve been thinking about it, and my inclination is to do NOTHING about it. The land contact is invalid, YES, but I don’t really need it since I’ve really bought this property “subject-to” (I have the beneficial interest in my file cabinet, remember).

Any concerns if I just leave it alone? I’m still in contact with the sellers and they are willing to sign anything I need. Should I get them to sign a “release of contract” to cancel the land contract? My buyers are going to refinance me out of the loan within about 6 months anyway (they are very good buyers, and have excellent credit, and are anxious to refi).

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Please keep it short… - Posted by William Bronchick

Posted by William Bronchick on September 05, 2003 at 19:32:12:

Jerry, the quick answer is, the property is owned by the trust, which is owned by your corporation, so I don’t see how you are in a bad place. The trust can always appeal property valuations.

In the future, please (this applies to veryone) keep the questions, short and as “generic” as possible. The purpose of the board is to address legal issues and concepts, not particular individuals’ legal matters.

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Re: Please Help - Posted by Mark CO

Posted by Mark CO on September 11, 2003 at 12:48:33:

Bill, I have recorded a general warrantee deed to a house in my name thinking I would get quick financing in my name and satisfy the seller?s loan. Now he (the seller) is willing to stay on the loan for a year. Can I fix this situation so as to do a real sub2 using a land trust and my llc? How?
Thanks