Posted by JDKastrava on March 16, 1999 at 21:49:31:
Whew! Thanks Rob, I’ll cancel my ticket to Bolivia and get my things out of pawn first thing in the morning. LOL
JohnK(CA)
Subject to and liability? - Posted by JDKastrava
Posted by JDKastrava on March 16, 1999 at 24:06:33:
Would someone kindly address the following liability issue. Suppose I take title subject to an existing 1st loan, and then L/O the property taking, say $3000 for option money, and after a few months the lender finds out and wants me to qualify for an assumption (No Way!)Would it be wise to just stand my ground and assert that payments are being made, so get off my back?
Wouldn’t the T/B have some sort of recourse, or should I be able to cover that issue in our L/O agreement. Also regarding title, would the title co have any problem issuing a title policy on a title transfer if it was subject to the 1st, and the lender wasn’t notified?
These are just what ifs.
Thanks for your response… It just ocurred to me that I should just call the title co and ask them Duh…
JohnK(CA)
Re: Subject to and liability? - Posted by Bill Gatten
Posted by Bill Gatten on March 16, 1999 at 19:16:51:
If the payments are current and the insurance and property tax are in good order, the lender won’t bother you. They could if they wanted to, but they won’t. Lenders use the DOS as a “justification” for foreclosure: not the “reason” for it. If you screw up and they want the property, they’ll zap you; but they’re highly unlikely to foreclose because of the transfer itself… unless they have another agenda (rapidly soaring interest rates, a mandate to purge thier portfolio, sale of the bank to another bank, a need to set an “example,” etc.).
And, regardless of what happens… law suit not withstanding: unless you criminally defrauded someone,
you won’t go to jail (with all due all due defference to Rob),
And I agree, Bill Bronchik’s course is an excellent way to learn about the protection afforded by land trusts.
Bill
Re: Subject to and liability? - Posted by Rob FL
Posted by Rob FL on March 16, 1999 at 18:27:08:
As far as the “subject to” is concerned, the only thing the title co. should be concerned about with the mortgage is pro-rating the interest and determining how much cash-to-mtg is needed at closing. Other than that they shouldn’t really care who is liable on the note. They will just make the mortgage a title exception on the title insurance policy. We do this all the time at the title insurance co. I work for.
As for the tenant buying on the L/O, you better make sure that if worse comes to worse that you have the capability of refinancing the property. If you don’t and the lender were to foreclose the tenant might just sue you for fraudulently taking his money and that could mean jail time. On the lighter side, the chances of that actually happening are pretty slim.
Re: Subject to and liability? - Posted by johnman
Posted by johnman on March 16, 1999 at 24:15:26:
JohnK(CA),
First of all are you going to take the title in your name? That wouldn’t be a good thing. Read about transfering title into a land trust. This will solve your worry about the lender asking you to take over the note. I believe the how-to articles have topics on land trust or go to www.legalwiz.com.
good luck,
Johnman
Re: Subject to and liability? - Posted by Rob FL
Posted by Rob FL on March 16, 1999 at 19:39:36:
Just as a caveat to what I said below. I think the chances of going to jail are pretty darn slim. I would really feel a lot more concerned about having the tenant lose his money and me being portrayed as a con-artist than actually going to jail. If a foreclosure was imminent and the tenant was going to lose his investment, I would try to at least refund him the money after the foreclosure occurred. But in all reality, the chances of any of this “hypothetical garbage” occurring in today’s market is probably next to nothing anyway. Sorry to get so far off on a tangent.