Posted by Michael Morrongiello on July 23, 2005 at 12:49:42:
First step - READ all of your documents carefully…
If there is no mention of the Note holder being able to charge you legal fees, recording fees, to release or satisfy you lien obligation to them - then they have no right to charge these fees.
The fact that they THEY pledged or borrowed against the property or your wrap loan is immaterial. However you should not be obligated to paying any expenses associated with their being able to effectuate a release of that lien.
As for the dispute over the balance and payoff amount. Hopefully you have clear supporting evidence (cancelled checks, etc.) that show and clearly prove without any doubt what you have paid and when. It should easy to demonstrate to them (or to a court of law if it comes down to this) that the funds you have paid, if applied correctly, will justify your payoff balance and not theirs.
If the wrap around instrument has enough equity in it, payment spread, interest rate spread, etc. - it may be feasible to simply sell off the WRAP instrument and LEAVE the underlying lien in place (in other words don’t pay them off in full).
Clearly another option is to get an experienced attorney involved to advocate your position.
This is a good example of why private notes held by individuals who are “civilians” must be monitored closely.
Best to your success,
Author of the Unity of Real Estate & “Paper” Study Course