Sub-2 Concerns - Posted by Brian_wa

import · December 31, 2005, 8:38am

Re: And the rest of the story is… - Posted by Brian (UT)

Posted by Brian (UT) on December 31, 2005 at 09:38:22:

Brian

Back again, read some of the other posts and I have a question, you say the judgement showed up during the escrow when you were selling the property.

How was your sale structured? was new financing being put into place and the lender was in danger of losing first position?

You bought it sub2, why couldn’t you sell it the same way and have the buyer take it subject to the existing loans and judgement, you could then have the title company exclude the judgement from their coverage and you set up a document reserving the right to get the judgement removed or paid off at a discount, buyer to cooperate, and buyer to pay you for the addition equity that is due you when it is done.

Paying the judgement in escrow removes your leverage with them and it makes a slander of title lawsuit more difficult. I hope you paid it off as being paid under protest and you reserving the right to dispute it. Also you can post a bond or have escrow hold a proper amount to cover the judgement until its resolved.

I don’t know if this makes sense to you because I really need my morning cup of coffee, sort of in a fog. Also the land trust argument, just set it up as best you can for your state. The california courts have called it a masking device and lenders who wanted to could use their due on sale clauses and call the loan, plus if an attorney or Real estate broker was involved and assisting they could be sued for interference and have been. Not as clear cut as everyone wants it to be. So far the lenders don’t see it as worthwhile to pursue checking the status of all their borrowers of record and pursue legal actions.

Brian

import · December 31, 2005, 7:00am

Re: And the rest of the story is… - Posted by Brian (UT)

Posted by Brian (UT) on December 31, 2005 at 08:00:05:

Brian

You forgot step one, having the sellers sign an affadavit acknowledging there are presently no judgements against them, and that they have not been served with notice of any legal action against them of any kind within the last 7 years, and no one has threatened them with legal action within the last 3 years.

And make it part of the purchase agreement.

Brian

import · December 27, 2005, 4:01pm

Re: And the rest of the story is… - Posted by Jim FL

Posted by Jim FL on December 27, 2005 at 17:01:30:

Brian,
I think with this as the case, you only course of action, would be to have an attorney review the transactions, both when you bought, and when you purchased, and nail the title company for it.
Seems to me they forced you to pay a judgement/lein that was not yours to pay.
This would take time and money of course.

or
You can move on, knowing you still made a profit and all is well in the world.
Then, plan accordingly.
Since it seems you are having a difficult time finding an attorney or title company who understands how you purchased, which by the way, I know might be hard, but not impossible.
Anyway, find a lawyer who either does understand what you are doing, or one who will listen and be educated. Give them reference materials to review, heck some of the sub2 articles here might clear their minds a bit.
Then, when buying subject to, use the attorney to close, and obtain title insurance when you buy.
This way, should some goofy title rep, or company insist a judgement in a previous owners name, granted AFTER you owned the subject property must be covered, have them make that claim in writing, against your title policy from when you bought.

Bottom line, take the problem by the horns and fix it, because you were fed a line here, by those who don’t understand, in my humble non-legal laymans opinion.
I would not have paid the judgement myself, and even delayed closing to move it elsewhere, along with ALL other business, if my title company pulled something like this.
Heck, if this was doable, then why not find the owner of the title company, see if he bought his house from someone, and have them sign a lein to you against his house…would he pay that?

I love it when REI pro’s show their posterior, and in your case, it seems the title company messed up, based on what you describe.

I’m also assuming you provided a paper trail of how you purchased the property to the title company, as proof, meaning, the land trust, and beneficial interest assignment forms etc.
No problem disclosing that stuff at close, since you are selling anyway, I’d think.

I never show that stuff, but do sign an affidavit at close that I have the athority to sell the house, on behalf of the trust, and that the trust is and does remain in full effect.

My first mission for 2006 if I were you, would be to locate and hire a new competant re lawyer to represent you, and handle your business.
When your deals are making you $30k plus, a couple grand here and there to make sure they do indeed close, is just good business sense.

HTH,
Jim FL

import · December 27, 2005, 10:08pm

And all this happens in USA?.. - Posted by D S

Posted by D S on December 27, 2005 at 23:08:52:

And all this happens in USA?
How about the rights of the victim?

import · December 27, 2005, 2:19am

Re: Sub-2 Concerns - Posted by whyK-CA

Posted by whyK-CA on December 27, 2005 at 03:19:52:

So they were saying the former owner still have some interest in the property when they had non. I?m not sure they just did not believe you or they just did not understand the trust. Did you try to prove what you are saying is true with documents? (trust doc and assingment of bene. Int, maybe even with the contract)

Have you tried Chicago Title? But I think sometimes it comes down to indivisual title rep you are working with.

import · December 27, 2005, 1:44pm

Re: Sub-2 Concerns - Posted by WAREIA

Posted by WAREIA on December 27, 2005 at 14:44:18:

Any and every Title Company if the Trust was done correctly and the proper documents filed.

import · December 29, 2005, 7:39pm

Re: Use an attorney - Posted by Joe Kaiser

Posted by Joe Kaiser on December 29, 2005 at 20:39:45:

They get title insurance from title companies.

What was Michaela’s question? I must have missed it.

Joe

import · December 29, 2005, 7:40pm

Re: Use an attorney - Posted by Joe Kaiser

Posted by Joe Kaiser on December 29, 2005 at 20:40:58:

Not done. Couldn’t tell you why, never really thought about it. Attorneys
close deals and all of that stuff, but title comes from title companies.

Joe

import · December 31, 2005, 1:07pm

And the - Posted by Nike

Posted by Nike on December 31, 2005 at 14:07:41:

Slander of title? Based on the facts provided? Nonsense–the judgment creditor merely recorded the judgment he obtained against the former owner. The title company looked at the chain of title and concluded that the judgment lien attached.

Your last paragraph is a doozy–can you cite one court case where a court ruled that a lender could accelerate the note based merely on the fact that the mortgagor/owner placed title in a land trust? And cite one court case where an attorney was sued for assisting in setting up a land trust under similar facts?

import · December 31, 2005, 2:41pm

Re: And the rest of the story is… - Posted by Scott Shubert

Posted by Scott Shubert on December 31, 2005 at 15:41:21:

This would not have prevented the judgement from being attached and if anything would only give Brian the right to have more expense and hassle if he wanted to sue the seller for having these judgements which would probably not get any results. Or if anything it would give him the opportunity to pass on the deal if they happened to be honest and disclose that they have a possible judgement. This would do nothing to prevent a subsequent judgement from attaching a lien illegally as happened in this case.

import · December 27, 2005, 10:18pm

Why the innocent should pay the Bill? - Posted by D S

Posted by D S on December 27, 2005 at 23:18:07:

Why the innocent should pay the Bill is my question?
You were supposed to be disclosed all liens and pending judgements. If you buy a “clean” title no one in the world should be legally able to place someone else’s judgement on a third party PERIOD! We call this country USA not United African or arabic states.
The innocent should have the full protection of the law.

Good luck,
I hope the one responsible for that 8.5K pays it at the end.

import · December 27, 2005, 10:30am

Re: Sub-2 Concerns - Posted by Kristine-CA

Posted by Kristine-CA on December 27, 2005 at 11:30:45:

The title company knows what they are doing–they have no interest in
being sued for an outstanding judgement even if the judgment is not
owed. It’s not that they are worried about paying it, it’s that they want
to reduce expenses should any one want to sue them. They are
reducing their risk by not issuing a policy until that lien is cleared.

I doubt any title company I’ve worked with would write the policy
either. Kristine

import · December 27, 2005, 9:48am

Re: Sub-2 Concerns - Posted by brian_wa

Posted by brian_wa on December 27, 2005 at 10:48:42:

I provided all the docs that you mentioned to no avail. With all the sub-2s that so many investors are doing, I’m really surprised that no-one went through the same issues. I wish there’s somebody who could provide me info to one company/title rep who would understand the whole scenario.

Brian

import · December 27, 2005, 4:16pm

Re: Sub-2 Concerns - Posted by Brian_wa

Posted by Brian_wa on December 27, 2005 at 17:16:38:

Just give me a name and a number. Stop with this theoretical stuff.

import · December 30, 2005, 6:55am

Thats not the point & Michaela’s question - Posted by Marc Donovan

Posted by Marc Donovan on December 30, 2005 at 07:55:58:

I have my attorney do the closing. I don’t go to a title company - I go to my attorneys office to close.

The whole point is I am not dealing with some title agent that got their degree in night school and now thinks they know it all. I am dealing with a JD who is a real estate specialist and if he has not seen it all I would be very surprised. I really don’t care who wites my title policy. My attorney provides the title opinion to the policy underwriter.

Michaela wanted to know how you are able to make 10 times your investment on every deal. You responded cryptically, she asked for clarification and you did not respond.

http://www.creonline.com/wwwboard/messages/4499.html

import · December 31, 2005, 6:35am

Re: Use an attorney - Posted by Brian (UT)

Posted by Brian (UT) on December 31, 2005 at 07:35:03:

Joe

Many years ago I did a little investing in the Seattle area (western WA) and the closings/escrows were handled by the title co and the title insurance policy of course was issued and underwritten by the same company.

However a builder friend had me join him in a few deals in the Spokane area (eastern WA) and the closings/escrows were handled by attorneys and the title insurance was issued by the attorneys company but underwritten by Lawyers Title and we were told that was the norm for the eastern side of the state.

I don’t know if it is still the same, but I prefer doing business with real title companies and I don’t think I would like doing business in a attorney closing state, heard about to many bad lawyers who seem to be in the real estate closing business by default, I quess their cars couldn’t keep up with the ambulances. (Lawyers may respond to Disbar The Losers Inc.)

Brian

import · December 29, 2005, 10:48pm

Re: Use an attorney - Posted by WAREIA

Posted by WAREIA on December 29, 2005 at 23:48:28:

I thought Attorneys could sell Title Insurance. I know in NC you have to use an Attorney to even pull Title and they usually can’t pull a report outside of their own county.

Maybe someone from NC can give us the real poop.

import · January 1, 2006, 6:49pm

Re: And the - Posted by Brian (UT)

Posted by Brian (UT) on January 01, 2006 at 19:49:11:

Nike

I didn’t state there was an absolute slander of title because the facts still were not fully disclosed but the possibility still existed and until we know otherwise I am not going to suggest to someone to throw away $8,500 without investigating it furthur. As for the title company said so, so what? you haven’t heard that title people make mistakes, or maybe they are all perfect in your state.

Secondly I didn’t say a lender could accelerate a note because he put his property into a trust. It was obious that a benificial interest was transfered to the investor and that will trigger a due on sale clause in any state that I’ve invested in, just because the lender is unaware doesn’t mean it hasn’t been triggered.

Thirdly to add to your education, a precedent setting case for suing a profession advisor such as a broker or attorney for tortious interference with prospective economic advantage was estabilished intially in the case of J’Aire Corporation v. Gregory (1979) 24 C3d 799. And there have been many other cases since then. The usual penalty is the difference between the interest rate at the time of sale and the time of discovery by the lender plus attorneys fees. And the reason I’m familiar with this, is a broker friend of mine was on the receiving end of such a suit and the loan was over $2 million, difference wasn’t a small amount, and his license was still was subject to review after by the department of real estate.

The courts have ruled that the activity of putting a property into a trust and then assigning the trust to a new owner is simply “masking” a tranfer from one owner to another.

But maybe your one of those who thinks the world is flat and due on sale clauses can’t be triggered, yes it is a doozy of an idea that a lender can enforce their rights, what next?

Brian

import · December 27, 2005, 5:08pm

Re: Sub-2 Concerns - Posted by Brian_wa

Posted by Brian_wa on December 27, 2005 at 18:08:59:

Your explanation is most reasonable and makes lots of sense. Thank you

Brian

import · December 27, 2005, 2:22pm

title companies - Posted by Kristine-CA

Posted by Kristine-CA on December 27, 2005 at 15:22:35:

Brian: although the judgement was recorded after your deed, was the
actual judgement date before then? I can totally see where the title
company is coming from (and can’t understand why other investors
here think the title company is acting out of line).

It’s really quite simple: title companies do not want legal tangles,
period. They do no want to pay money or expend resources. They do
not need another $800 (or whatever it is) for a deal that looks like it
has an issue). Now, it may not be good customer service on their part,
but it’s their bottom line.

Sounds to me like you brought them a deal with red flags. Transfer to
a trust shouldn’t be a red flag, but transfer to a trust with a judgement
that shows up during escrow AND if the judgement date (not recorded
date) precedes your deed…well, would you want to insure it?

It also sounds like you contacted other title companies and asked if
they could do the policy with the issue mentioned. In my experience, if
I want another title company to view an issue differently I don’t give
them the head’s up on it. I just submit the request and see what they
find. And they do find different things and they have different issues
with different things. Perhaps you were out of time and didn’t have
time to order title from someone else?