Posted by Cosette Austin on October 03, 2003 at 22:40:37:
Ok, I admit this is a mess up front. Just need advice.
I purchased a duplex in WI for 35k and sold it to the primary renter for appraised value of 128k. The plan is/was to owner finance the property to the borrower. I gave the borrower a Warranty Deed (notarized) and to secure my interest a Mortgage was signed in the amount of $126,325.00. I did not also secure a note with the Mortgage because I knew I was doing a simultaneous closing to a note buyer and the note buyer would create the note. I only gave the borrower the Deed because the borrower was under the impression I would leave town and not sell her the property. It was my thinking that I wanted to do this entire transaction of selling the property to the borrower through the note buyer in a simultaneous closing since I had a commitment from the note buyer before hand. In month number 1 (which was only two weeks after I closed) I had the borrower pay thier previous rent payments totalling $804 (utilizing the assignment of rents received from the previous landlord according to WI law) this is the rents of both units. I told the borrower I would have thier paperwork for the notes done when I assign the company that is going to accept the payments and that the payments would be split into two payments (1st and 2nd) not one.
To my surprise, but understandably, the note buyer says they will purchase the note after construction is completed.
Do to the construction taking more than one month as of October 1st the home wasn’t completed although, I still expect the borrower to make thier (now) mortgage payment and decided to send them the updated two mortgages secured by the two Notes. The borrower was instucted to send the payment via wire transfer to our account. It’s not as smoothe as I would have liked it because I preferred to have hired a loan servicing company. Either way, the borrower had already indicated she wanted the funds taken out of her account automatically every month.
To date the borrower has not paid. Complaint one is the tenants she had in the second unit moved out and complaint two is, do to the construction of the second unit not being completed on time, she counldn’t rent it and does not have all of the money.
I said OK, well send me what you have which was $600 and she would have the rest next Thursday. She has said for three days in a row she’s sending it and I still don’t have it.
The catch 22 is I know she has not recorded her Deed as yet and of course, I have not yet received the notarized new mortgage and note documents. In addition, the Mortgages and Notes can not be recorded do to the curent lien on the property between me and my private lender (unless I’m wrong).
SO, can I treat this as a rental and do a Notice to Vacate or do I have to do a Foreclosure??? The good news is the Mortgage she did sign does have a Power of Sale clause which allows me to do a non-judicial foreclosure if I have to go that route. But, am I protected with just a Mortgage and No Note? I assumed I’d be able to call the $126,325 do, but, probably couldn’t claim any interest since there is no note signed as yet.