Posted by Ben (NJ) on February 21, 2001 at 15:51:13:
I just got off the phone with my title company and my abstract company, (both top notch). Their exact words “do NOT negotiate, fight it until hell freezes over”. They said the exact opposite of everyone else, in their experience, well-founded and well-argued judgments do NOT get overturned easily. They even recommended two top-shelf attorneys who specialize
in defending tax foreclosure judgments and have an incredible success rate. Onward!
Huge windfall…an update…(long) - Posted by Ben (NJ)
Posted by Ben (NJ) on February 19, 2001 at 20:47:46:
Last week I posted about securing a final judgment in tax foreclosure on a home worth $208,000. My investment was
less than $35,000. Well, after a year of foreclosure proceedings in which the owners did nothing (and I mean NOTHING, no calls, no bankruptcy,no lawyers, no attempts to sell the property or refi, etc) the property owners finally hired an attorney, two weeks AFTER I got the judgment! This lawyer calls and says he will be attempting to vacate the judgment based on a number of reasons, all of them TOTAL BS! (which I told him). He really could not even argue, his grounds were so baseless. However, I just talked to a friend of mine, an attorney for a big institutional tax lien buyer. Incredibly he said that nearly every time someone challenged a judgment of theirs it was vacated, no matter how baseless. I find this amazing. Has anyone else experienced this? He did make one suggestion, rather than risk vacating the judgment, agree to sell the property BACK to the former owner and retain
a large chunk of that profit as opposed to risking it all
in a battle. Any suggestions?
Sell it to an unrelated party … - Posted by Ayn
Posted by Ayn on February 21, 2001 at 10:05:37:
all the real estate law for dummies books I read seem to talk about a “Holder in due course” as being exempt from some kinds of prior claims.
Re: Considering the numbers involved, - Posted by Jim V
Posted by Jim V on February 20, 2001 at 13:18:44:
I would think there is a fair possibility of a court believing it should be overturned.
Basing on a $208k FMV
Your cost of sale 6.5% or $13,520
Your cost of rehab $10,000
Maximum net would be $150,000 after you account for initial investment of $35,000
If you sold the property back to the owners for $135,000, you have no cost of sale, you have no rehab cost and you have no long term legal battle. Interestingly enough, $135,000 is just about 65% of the FMV. If the previous owner doesn’t have family to help finance it, hard money could be a solution. But, it does only leave a profit of $100,000.
Bird in the hand, IMHO.
Courts are very home owner friendly… - Posted by David Krulac
Posted by David Krulac on February 20, 2001 at 09:48:46:
Ben,
I had one case where the judge instructed the home owner from the bench on how they should proceed to overturn the case. He was acting as their attorney, IMHO.
Another case has dragged on for 6 years without resolution. And another case is 8 years old without resolution. Judges will ignore the limitations and will always sypacize with a poor home owner, you just have to get used to it.
The only time that you have a shot is when their is abandonment, but even that is not a sure thing.
Good Luck
David Krulac
P,S. I got your email and will answer privately later.
Re: I’ve heard that, too. - Posted by NJDave
Posted by NJDave on February 20, 2001 at 06:23:57:
I think that the informal, discretionary ‘window’ that Judges recognise during which time they would consider setting aside and/or reversing sheriff’s sales and other finalities that result in the loss of homeownership, is 6 months.
Any case law supporting either argument? (nt) - Posted by ScottE
Posted by ScottE on February 20, 2001 at 24:36:29:
.
I would try and strike a deal with the Owner (NT) - Posted by Tim Jensen
Posted by Tim Jensen on February 19, 2001 at 22:26:15:
Re: Huge windfall…an update…(long) - Posted by Nate
Posted by Nate on February 19, 2001 at 21:58:36:
He may be right. No personal experience here, but I would assume judges tend to side with the poor oppressed homeowner no matter how irresponsible they were, especially if you have a $150,000 profit in the deal.
Since you are an attorney, Ben, I assume the prospect of a long drawn out court battle does not deter you the way it would deter someone who has to pay their attorney hourly. However, it will still be a big distraction on your time, which is an indirect cost to you.
If the buyers can get a large chunk of cash or someone else to finance them (good luck…), I might consider doing it just to be done with the matter. However, I’m sure their idea of a “large chunk” of the profit is quite different from yours…
Good luck,
Nate
Re: Considering the numbers involved, - Posted by Ben (NJ)
Posted by Ben (NJ) on February 20, 2001 at 14:52:32:
Interesting. I am working on a similar analysis, except that I already have a tenant lined up who is willing to rent for a year and then buy the property after a year, insuring me long term capital gains treatment. A sale-back to the owner will incur short term capital gains tax. One advantage I have is that I wiped out a $ 115,000 mortgage on this property. Between multiple assignments and mega-merger activity
the note was lost. By vacating my judgment the former property owner risks reinstating this mortgage, which is foolish. I assume judges have less sympathy for behemoth banks who lose notes and neglect to record them, so a challenge by the bank will probably be a loser. Thanks alot for your input.
Re: Ahh, the crack of the bat, - Posted by Jim V
Posted by Jim V on February 20, 2001 at 15:32:49:
as you swing for the home run!
Adding the lost(?) loan in the figures, the previous owner really only has maybe $35k in net equity if they were to overturn and then sell the property. A cash payment to the owner of some percentage of that would undoubtedly speed the process and might help to keep the property intact. Being it is a civil matter, I’ll assume that’s legal
It sounds like you have a reasonable plan of action, although I wouldn’t necessarily expect rational action from the previous owner, they don’t have a history of it.
If a payment to the previous owner was to be made, do you know whether that would add to your basis? If it was necessary to obtain marketable title to the property, it raises that question in my mind.