Posted by David Alexander on April 15, 2000 at 24:22:46:
There’d be no mystery in that now would there… 
David
Title Company Nightmares… - Posted by David Alexander
Posted by David Alexander on April 12, 2000 at 16:52:00:
Ok, everyone am I beating a dead horse. I have a little note I’m selling off. 32k note, good payor, etc, etc.
Problem payor has a judgement for 10k for child support.
Title company wont insure the note and says if the note sells it will go into second position.
The house was originally sold on contract for deed and that was recorded. The plan was to convert to a new note and Deed of trust and assign it. Said no they couldnt and insure it. So we said ok, just assign the contract for deed and insure it.
Is this the title company not understanding OR ME? Seems to me the note is underlying and as long as it is just assigned it should not lose it’s first position. Anyway, any thoughts.
Should I be looking for another title company or is this just the way it is.
Paying off the 10k would kill the deal.
David Alexander
What we have here… is a failure to communicate. - Posted by MDonovan
Posted by MDonovan on April 17, 2000 at 15:21:54:
It all depends on when the mortgage was recorded (assuming there is one already – you don’t make that very clear). If the mortgage was recorded before the judgement, the mortgage is superior. You don’t give up your superiority when you assign your mortgage. If you did, then all the banks that batch their mortgages and sell on the secondary market would be getting hit with any new liens. Think about it. You are assigning your interest, and your interest is superior.
On the other hand, if there is only a contract for deed, then they are right. That’s one of the big gotchas with the land contract. Any judgements that exist prior to the last payment and deed transfer will attach to the property upon the transfer. Any mortgages created at the “closing” are all junior to the judgement. This assumes that the judgement is properly recorded according to your state law.
As far as foreclosing, the judgement would still hold first position since foreclosure does not remove senior liens.
Use a land trust. You become co-beneficiaries with the buyer. Create and sell a mortgage (or carry the paper yourself and borrow against it). The mortgagor would be the trust and you would both guarantee the note. Make your trust agreement such that if any mortgage payments are missed by the buyer, you will receive his beneficial interest. The judgement creditor may attach his beneficial interest, but they would only know about it if they depose the buyer. If they do get a writ against the beneficial interest, they would be assuming his obligations and they may not be prepared to handle it properly. Also, they would not be able to force you to sell the property – they are bound by the trust agreement. Most creditors would give up in frustration. Its just like the “charging order” in a limited partnership or LLC.
The best way to do this is to find an attorney who owns a title company. They would not balk at issuing a policy on this.
Are they on Elm street? - Posted by John Behle
Posted by John Behle on April 13, 2000 at 22:45:21:
Sounds like they are a nightmare. I don’t think they are right and would check with another company or attorney. Transfer of the note through an assignment should not in any way lessen or jeopardize the position of this note. I don’t think they understand you and what you are trying to do.
Re: Title Company Nightmares… - Posted by Eric C
Posted by Eric C on April 12, 2000 at 23:52:25:
Hi David -
Even though you already know my take on Texas CFD’s, I’m with Mike on this one. Run it by someone else.
Yours,
Eric C
ALL note funders are not the same… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on April 12, 2000 at 23:17:22:
David:
I am note sure what state your contract for deed instrument is recorded in ? and what type of property, payors, down payment, seasoning, la da di da…exists with regards to the deal?
However, assuming your contract for deed instrument was well drafted with provisions for default, acceleration, late fees, delivery of the title, etc., I do not see any reason why that contract instrument cannot be purchased by a flexible and understanding note investor (Read into this ME) without converting the contract to a more customary deed of trust and real estate lien note.
I don’t believe I would have any issue with the unpaid child support issues other than the increased risk associated with possible incarceration of deadbeat Dad payor if it ever came to that.
If you need assistance or perhaps another “fresh” look please feel free to contact me.
Warmly,
Michael Morrongiello
One more thought… - Posted by David Alexander
Posted by David Alexander on April 12, 2000 at 17:03:14:
Dont know if this is a way to go or not, but if I talked to the payors and then foreclosed with them knowing they would get the house back would this solve my problem, by wiping out the judgement?
It’s been three long months with this deal, and then this.
David Alexander
John, does ANYONE understand David? nt - Posted by CarolFL
Posted by CarolFL on April 14, 2000 at 08:41:48:
.
Re: Title Company Nightmares… - Posted by David Alexander
Posted by David Alexander on April 13, 2000 at 01:03:12:
This one is actually in Oklahoma.
David Alexander