Posted by Kristin on December 27, 1998 at 08:53:41:
Yes, I guess you’re right. If you know of a Houston area attorney who works on holidays and weekends, please send me his name and number. I guess it never occurred to me to expect that, unless I had someone on permanent retainer.
Foreclosure posted- No Liens Found@!!! - Posted by Kristin
Posted by Kristin on December 24, 1998 at 08:33:06:
Okay, here’s a weird one! Any Advice?
(I’m in Texas)
I have a client whose home is posted for foreclosure. We were going to refinance him through our mortgage company, as the LTV is very LOW. We opened title, and when the commitment came back, Schedule C said there are no outstanding liens on this property.
Now, obviously somebody at the bank dropped the ball, because the lien hasn’t been recorded. But, here’s my dilemma. The seller is so agitated about this situation, he has offered to sell me the house for $25,000. (Repaired Value is about $87,500). Does anyone know what would happen if we purchased before the auction, and then went to court to overturn the foreclosure?
I can’t get ahold of my attorney until Monday, and I’m dying to know what I should do! Any advice is greatly appreciated!
Happy Holidays to all.
Kristin
Re: 1st things 1st - new attorney - Posted by George
Posted by George on December 25, 1998 at 22:44:03:
The first thing I would do is get a new attorney!
Re: Foreclosure posted- No Liens Found@!!! - Posted by Bud Branstetter
Posted by Bud Branstetter on December 25, 1998 at 08:19:08:
You have until the 5th to resolve. I missed what the lien value was. If there is enough equity to make it worth while you can get a restraining order against the trustee to postpone the foreclosure. It would give you time to resolve the lien situation.
Actual vs. Constructive Notice - Posted by Rob FL
Posted by Rob FL on December 24, 1998 at 16:23:10:
There are 2 different types of notice that you can have in the title business. (1) Constructive notice. This means that the lien has been perfected by recording it into the public records. Constructive notice puts the entire world on notice that there is a lien against a particular piece of property. (2) Actual notice. This means that you have personal knowledge (or would have it if you did reasonable due diligence) that there is a lien against the property (even if unrecorded).
An example is this. Seller owns a 50 unit apartment complex and all the units are rented out to other people (not the owner of the property). None of the leases are recorded. When you buy the property you can’t start evicting all the tenants by saying “Your leases are not recorded so you have to move out.” No, you must abide by the terms of their leases. The reason being is that you have “Actual Notice” that they are occupying the property. You knew or should have known going in that the apartments were occupied by doing a simple inspection.
Now your case with the lien is different. You may be able to LIE and say you didn’t know about the lien being foreclosed when you bought the property, but if the seller says I told the buyer about it, then you may have actual notice of the lien.
It is probably best to have the title company recheck for the lien. I search titles all day long (and I sometimes overlook liens too). Good luck with your endeavors.
Merry Christmas.
Re: Foreclosure posted- No Liens Found@!!! - Posted by Tom Brown
Posted by Tom Brown on December 24, 1998 at 13:40:11:
I think that you are going to find that you do not have an insurable title. If the house is in the process of foreclosure, a title search should turn up a notice of foreclosure. No reputable title company is going to insure the title until the foreclosure is cleared.
You also have to remember that liens do not have to be filed to be valid. That is the reason for title insurance in the first place.
probably old loan missed by title co - Posted by BankRobber
Posted by BankRobber on December 24, 1998 at 10:13:23:
It is more likely that the Title company missed an old loan on the property that was assumed at least once. The foreclosure is most likely being done under the name of the original Borrower. If the Seller knows about the loan they will have to sign a lien affidavat at closing disclosing it.
Re: Foreclosure posted- No Liens Found@!!! - Posted by Jimbob
Posted by Jimbob on December 24, 1998 at 09:44:24:
Kristin,
It sounds like you had a “preliminary” title search done, have you and your attorney investigated a “full” title search? Often times, liens will show up on the full search but not the preliminary. If you find there are no liens on the full search and you take possession and title to the property and record it, you should be able to secure clear title, the old saying is “first in line, first in time” when it comes to recording liens. You will definitely want the title company to give you full title insurance on the property in case someone comes back and tries to record a lien on the property after you close.
Here’s where it gets interesting, if the bank did not record a lien to secure their interest in the property with the current seller, technically that seller may not owe anything on the property, however, if the seller signed a contractual agreement with the bank when he first bought the property, he would still owe the bank the money he borrowed to buy the house.
There may be certain laws in Texas that prevented the bank from recording a lien against the proeprty which is why they didn’t do it. But that matter is for the seller to worry about.
In any event, title insurance and recording on your part is critical.
Jimbob
Re: 1st things 1st - new attorney - Posted by Kristin
Posted by Kristin on December 26, 1998 at 13:47:25:
Just out of curiosity, what is it that you blame the attorney for?
The title company and the attorney I currently use are not connected in any way.
Kristin
Re: Foreclosure posted- No Liens Found@!!! - Posted by Kristin
Posted by Kristin on December 26, 1998 at 13:45:51:
Thanks, Bud! I was hoping you would respond, as I know you are in Texas. I’ve spoken to the seller again, and am probably going to drop this deal. THere is something more going on here, and none of it is on the level. I think it’s better to move on, and let this man find his own remedies.
I appreciate your suggestion of a TRO… that’s probably the route I will suggest the seller take on his own.
Sincerely,
Kristin
Re: probably old loan missed by title co - Posted by Kristin
Posted by Kristin on December 24, 1998 at 12:27:45:
I wish it was that easy! Unfortunately, this is a 2 year old loan, and not assumable.
Defintely one of the weirdest situations I’ve run into.
The lien affidavit you mentioned is a good point, and one I didn’t even think about.
Thank you for your feedback… it is much appreciated.
Kristin
Re: Foreclosure posted- No Liens Found@!!! - Posted by Kristin
Posted by Kristin on December 24, 1998 at 12:24:00:
Jim,
Thank you for your insightful comments. Rest assured that I did have a full title search done, which is why I find it so unbelievable that the lien did not show up. However, we always require full title insurance on any property that shows a possible glitch in the chain of title, so we’re safe there.
If we decide to go ahead with the purchase, I will personally deliver the deed to the filing office at the courthouse right after the closing.
I really appreciate all your help!
Sincerely,
Kristin
Re: 1st things 1st - new attorney - Posted by George
Posted by George on December 26, 1998 at 21:23:02:
You posted on Thursday morning and stated you can’t get in touch with your attorney until Monday. You need an attorney that you can get in touch with a little faster than that. 24 hours MAX.
Possible SCAM? - Posted by John Behle
Posted by John Behle on January 01, 1999 at 16:48:13:
This sounds like a version of a scam hatched in prison and then spread through Utah and several surrounding states.
The criminal fraudulently re-conveyed the trust deed on a certain bank’s loans. They even had a convincing forged signature of the woman at the bank that would have signed the re-conveyance - if it were real.
They then contacted agents and said they were a lender from Colorado that had to foreclose on the home and they just wanted a quick sale. They sold the properties below market with a low down on a contract and then sold the contract. Title insurance covered the sale and paid off to the note buyers.
A simple title search by anyone would have revealed the problem.
In your deal, go search the title. Even if you are going to pass, it can be interesting. It may be that the first loan was fraudulently re-conveyed and their is no foreclosure.
The title company doing the search may have found the loan and the re-conveyance that cancels it out. The fact that they did not find or report that there is a notice of default makes it sound real fishy. Check it out at the County Recorder’s office.
Re: Missed - Posted by maker
Posted by maker on December 24, 1998 at 13:30:31:
Contact the old title co, where the original title was done at purchase and the original unrecorded Deed Of Trust may still be in their files.rudy-tx