UPDATE - Bank Says I Don't Own House - Posted by Elizabeth NJ

import · May 12, 2006, 2:05pm

Re: House - Posted by Elizabeth

Posted by Elizabeth on May 12, 2006 at 14:05:51:

Good Grief indeed. Nike, your agitation is coming through in your posting.

There’s a big difference between “valid” and enforceable.

A deed may be valid but have no force or effect if not properly recorded, the purpose of which is to secure that grantee’s ownership of the property.

During my research, I came across a probative article written by Prof. Knud Hermansen (also an attorney) of the University of Maine, which provides a clear explanation about race-notice. The article also provides a codified listing of the states which have race or race-notice statutes and cites the statute of those states. I believe you will find this most informative. Here?s the link:

In addition, here?s the cite from the NJ Statutes, Title 46 ?Property?, at Chapter 22 “Failure to record or register deeds or instruments; effect as to subsequent judgment creditors, purchasers and mortgagees”.

NJS 46:22-1 ?Every deed or instrument of the nature or description set forth in section 46:16-1 [Instruments Entitled to Record] of this title shall, until duly recorded or lodged for record in the office of the county recording officer in which the affected real estate or other property is situate, BE VOID AND OF NO EFFECT against subsequent judgment creditors without notice, and against all subsequent bona fide purchasers and mortgagees for valuable consideration, not having notice thereof, whose deed shall have been first duly recorded or whose mortgage shall have been first duly recorded or registered; but any such deed or instrument shall be valid and operative, although not recorded, EXCEPT as against such subsequent judgment creditors, purchasers and mortgagees.?

And yes, I am a bona fide purchaser.

Regards.

Elizabeth

import · May 12, 2006, 1:42pm

Funny, funny, funny… Anne. - Posted by JT-IN

Posted by JT-IN on May 12, 2006 at 13:42:02:

Made me laugh big time with your mental image of the Wild Deed and Quiet Title… novel description…

Quiet Title is very similar to a foreclosure suit, where anyone who is known to have an interest in the property is put “on-notice”, that you are attempting to “Quiet Title”, or extinguish anyone elses interest in the property… These are also advertised, so that if you aren’t given notice, you could be aware of the action to extinguish claim to the property. After the advertisement period and a hearing to quiet title, and if no one successfully raises a counterclaim, then the Plaintiff would enjoy the quieting of title, or clear and unencumbered ownership, without claim from another party.

Time frame and expense thing… right, as long as no one raises a counterclaim. If a countreclaim is heard, then a hearing must be set, and an examination of the evidence of claims. The court will then decide questions of ownership or claim to the property, based on the evidence. Many times a Quiet Title action is what will decide adverse possession, as it is the filing of this action that brings the claim of ownership to a head.

In the example, both Party B and C have claims to the property. Party C is the one that is truly entitled to the property. Party B really got their money, and is out nothing, but is just putting Party A in a tough legal spot, as he will have to deal with the Title Co. who handled the transaction when he conveyed the property to Party C. If you think about any closing that you attend and convey property, one of the affidavits that you sign states that you haven’t deeded this property to anyone else, or there are No other claims against the property…? In this case, that really wasn’t true, as there was a Deed in existence where Party A had ALSO conveyed the property to Party B, albeit a Quit Claim, but still a conveyance. Evne though it is unrecorded, and even though that QC Deed is recorded after the filing of a valid Warranty Deed, it still casts a flaw upon the title. Quieting of the title would be necessary in order for Party C to properly convey their interest, free and unencumbered. Now Party B could be claimed to have “slandered the title” of Party A, but in reality the Deed was valid and given without durress, so no slandering exists.

The recordation of the deed by Party B in this case, (someone that you know well), is nothing more than a negotiating tool against Party A. A will have to pay for the quieting of title and legal fees incurred by the title company, if it came down to that. It may also hinder A’s ability to work with certain title compnaies in the future, after conveying such a deed. It will not likely come down to that, but it is simply a wedge to get A to do what B wants him to do…

Now if only Party A could be put in jail, that would be cool… I wold vote for you at Title Commissioner… LOL

Hope that helps some…

JT-IN

import · May 11, 2006, 2:00pm

Re: Wild Deed issue - Posted by Jim V

Posted by Jim V on May 11, 2006 at 14:00:33:

Another aspect of this issue I find interesting is the payoff demand concept. If the lender completed a foreclosure and received a deed, then they shouldn’t have a lien for which to issue a payoff demand. The only way the lender would likely be able to collect funds for the property would be to convey the deed through a conventional sale.

If they choose to ignore their deed and proceed with a payoff of the lien, I’d think they’d open themselves to potential litigation from the previous homeowner and potentially any other homeowner facing foreclosure with them in the future.

Certainly interesting.

import · May 12, 2006, 3:30pm

House - Posted by Nike

Posted by Nike on May 12, 2006 at 15:30:00:

Doesn’t the language of the statute sound similar to my first paragraph?–in fact the last sentence of the statute you quoted states (I paraphrase) that an unrecorded deed is valid and operative except against…BFP’s.

We finally get to the issue of whether you’re a BFP and you merely claim you’re BFP without any analysis? No mention of how the previous foreclosure action (Lis Pendens etc.)may impact your status as a BFP? No metion of how the fact that a tenant living in the property with a lease with a party other than the record owner may impact whether you you’re a BFP? If your attorney has addressed these issues I’d be curious what his advice is.

import · May 12, 2006, 6:14pm

Okay, I think I’ve got it - Posted by Anne_ND

Posted by Anne_ND on May 12, 2006 at 18:14:40:

Hi JT-

Thank you for the explanation.

It sounds like Party A isn’t have much fun at this party anymore. Best of luck in this situation, although it sounds like you have total control.

I may have a situation where someone is trying to sell a property, and yet the heirs (widow and son) have no idea that the property is listed with a realtor. I was disbelieving at first that someone would try to sell a property that they didn’t own (just because it’s so flagrant), but my eyes have been opened. There is more than one Party A out there.

have a good weekend~

Anne

import · May 11, 2006, 11:55pm

Re: Wild Deed issue - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 11, 2006 at 23:55:21:

Hi Jim,

Were you the one who responded to my original posting last month on this subject, who suggested that there was no mortgage to pay off since the bank had bid their lien?

There is still an outstanding obligation under the mortgage even though the bank took back the property. The bank can’t own property – although their attys have apparently lost sight of that fact – so I’ll pay off the balance of the mortgage and they’ll deed over any right they might have to the property by virtue of the foreclosure & their unrecorded deed.

I’m wondering how many other properties this bank may unknowingly own because of the mishandling of foreclosures by their attys. Perhaps my deal is just the tip of the iceberg and even more motivation for the bank to settle.

Thanks for your comments.

Elizabeth

import · May 12, 2006, 3:47pm

Re: House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 12, 2006 at 15:47:19:

Are you and I using the same definition of a bona fide purchaser?

In a race-notice jurisdiction, a bona fide purchaser is a subsequent purchaser for value without notice of any prior interest who records his deed first.

The defining term here is “notice of any prior interest”. Yes, the bank was a party in interest by virtue of its mortgage. So was the local water company.

Using your logic, perhaps I have called the bank and said, by the way, is there any chance you might foreclose on this property before I buy it?

Under any interpretation of the law, the tenant, with or without a lease from a third party, cannot claim a right to the property, or to bar or impede by estoppel my right as the bona fide purchaser. As a matter of fact the bank had no right to either issue a lease to the tenant or enforce it through the L/T courts as we saw on Tuesday.

import · May 12, 2006, 1:31am

Re: Wild Deed issue - Posted by Jim V

Posted by Jim V on May 12, 2006 at 01:31:38:

Elizabeth,

Sorry for the double post, I was just fascinated by the concept of lenders not being able to own property in NJ.

I checked:
Fannie Mae - They had property listed.
Freddie Mac - They had property listed
Horizon MSI - They had property listed.

I could do an exhaustive search, but didn’t see the point as it appears lenders can own property in NJ.

import · May 12, 2006, 12:51am

Re: Wild Deed issue - Posted by Jim V

Posted by Jim V on May 12, 2006 at 24:51:04:

Elizabeth,

No, I don’t think I posted previously about the mortgage-no mortgage scenario after foreclosure. Apologies to anyone who might have posted it, and I unknowingly stepped on their post.

I do have some issues with your concept that a lien still exists, even after the lender took back the property. Foreclosure extinguishes a homeowner’s rights to the property, the lender may, in some states, seek a judgment against the homeowner to satisfy the full balance of the lien. I’m not aware of any state that allows a mortgage lien being foreclosed to persist after foreclosure.

I’m kind of confused by your statement that “The bank can’t own property”. To the best of my knowledge, it’s possible for any entity to own property in NJ, there are just some nuances about local property management required by statute. Perhaps you can clarify?

import · May 12, 2006, 4:53pm

Re: House - Posted by Nike

Posted by Nike on May 12, 2006 at 16:53:54:

The local water company–you’re being facetious? You wrote:“Using your logic, perhaps I have called the bank and said, by the way, is there any chance you might foreclose on this property before I buy it?” Here you’re being ironic–right? The bank did foreclose and they were awarded the deed.

Did the judicial foreclosure (Lis Pendends) and subsequent public auction amount to constructive notice? If yes, you’re not a BFP.

Regarding the tenant- you said that you knew the tenant had a lease with a party other than the record owner (the party that provided you with the deed). Did this information rise to the level of inquiry notice requiring you to investigate whether there’s a third-party claim? If yes, you’re not a BFP.

import · May 12, 2006, 1:49am

Banks Owning Property - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 12, 2006 at 01:49:02:

Hi Jim,

It has always been my understanding that banks may not own property and that they are precluded from doing so by a federal law which mandates that banks manage performing assets and liquidate non-performing assets. That’s not to say a bank can’t hold onto a property while they process it over to HUD, but they can’t own property in the traditional sense.

You are referring to REO’s or bank owned properties which the bank is holding with the goal of selling them. I’m not talking about this process. When I say that banks can’t own property, I’m specifically referring to this bank I’m dealing with whose attys seem to be in the habit of holding onto properties and managing them as if they themselves own them.

As a matter of fact, I was just doing some research on PACER to see how many other problems this bank had relating to foreclosures. They have been sued over and over by homeowners claiming fraudulent mortgages, taking assignment of mortgages from known predatory lenders without recording the assignment, failing to produce original mortgage documents, and it goes on and on. In some cases the bank settled and insisted on confidentiality of the settlement.

Back to the idea of not having to pay the bank, I read somewhere that if a bank cannot produce the original mortgage and note signed by the borrower, that it has no authority either to foreclose or collect payment. Do you know anything about this?

I’m not looking to NOT pay the bank because that’s the easy way out. But I am seriously thinking about digging deeper to see how far the bank’s mishandling of other properties may go. Of course, the bank is a lot bigger than me so I’ll probably have to find a hiding place if I do that.

There’s another posting in this thread regarding banks owning property. Apologies to the poster, I can’t remember who put it out there.

Thanks for your comments.

Elizabeth

import · May 13, 2006, 10:31pm

Re: House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 13, 2006 at 22:31:19:

“Nike”,

I welcome advice and constructive criticism.

However, I find your postings to be extremely argumentative almost to the point of being hostile. You seem determined to pull me into a constant debate with you and I have no interest or time to do so.

I don’t need you to determine for me whether or not I legally own the house. That is now a moot point. I do own the house.

I will no longer respond to your emails if you continue posting in the same argumentative manner.

I did not know about the tenant when I bought the house because the downstairs is all boarded up and there was no evidence of anyone living in the property, and I do not enter boarded properties that don’t belong to me. By the way, you missed a point - there was no public record of a foreclosure.

Have a nice day.

import · May 12, 2006, 2:31am

Re: Banks Owning Property - Posted by Jim V

Posted by Jim V on May 12, 2006 at 02:31:28:

How long does it take to process, clarify title and list a property for sale? I’m guessing as long as it takes, which won’t probably be defined by statute.

NJ, I believe, requires names of borrowers, property address, mailing address and basic loan info to initiate foreclosure. COPIES of the note, mortgage, assignments and maybe more will be needed for final judgment.

IMO, PACER is going to reflect a higher ratio of lender problems, if people are using BK as a resource, they will also be more inclined to seek other possible legal defenses to foreclosure. That is just an opinion, I have absolutely nothing to back it up.

There is no doubt the lender didn’t process things in this situation in, uh, a timely manner. I sort of wondered whether this should have been an Adverse Possesion type approach, but I think NJ has something like a 17, maybe 25 year AP timeline. Moot issue at this point.

import · May 14, 2006, 6:52am

House - Posted by Nike

Posted by Nike on May 14, 2006 at 06:52:51:

Elizabeth- I’m sorry I upset you. I was merely trying to probe and challenge you to further the discussion. As I said before I hope things work out for you.

import · May 14, 2006, 3:55am

Re: House - Posted by Jim V

Posted by Jim V on May 14, 2006 at 03:55:24:

Elizabeth,

Nike is better at asking questions rather than providing answers. That’s not a bad thing, just probably geared towards providing thought.

The concept of being interested in pre-foreclosure/foreclosure property, but not willing to enter a boarded-up property that doesn’t belong to you is interesting. Various facets of foreclosure investing seem to attract adrenaline junkies, which includes those who enjoy entering boarded up buildings that may, or may not be occupied.

import · May 12, 2006, 2:38am

Re: Banks Owning Property - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 12, 2006 at 02:38:43:

Jim,

The cases I looked at on PACER weren’t bankruptcy - I was in the civil section. In NJ the adverse possession timeline is 30 years. I had to check it out recently because I’m buying a property where the neighbors years ago built their garage with one part of a wall attached to the side of the house I’m buying. They actually stole about 5 feet of my seller’s property width. No one’s ever complained about it, but we’ll have to straighten it out before closing.

Elizabeth

import · May 15, 2006, 12:21pm

Re: House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 15, 2006 at 12:21:51:

Jim,

Nike apparently has more time than I do. And his posts are argumentative.

Actually I’m not interested in pre-foreclosures or forecloures and I thought I mentioned that in one of my responses here.

import · May 14, 2006, 6:33am

  House - Posted by Nike

Posted by Nike on May 14, 2006 at 06:33:23:

C’mon Jim. The questions contain the answers. Elizabeth presented interesting and unusal facts to an otherwise straight-forward question/issue. She recorded the deed that she received from the Record Owner. To prevail over the bank’s claim she needs to be a bona fide purchaser without notice of the bank’s interest. Notice can be facts she learned, facts the law imputes to her (public notices etc) and facts that require her to investigate further whether there may be third-party claims (i.e. tenant living in the building with a lease with someone other than the Record Owner).

I don’t understand why this so difficult. Elizabeth presents herself as someone who knows what she’s doing (in fact somewhere in this dreadfully long thread she claims that local investors retain her to resolve their title issues) yet she becomes flummoxed and disturbed by basic questions.

import · May 16, 2006, 1:25am

Re: The value of discussion - Posted by Jim V

Posted by Jim V on May 16, 2006 at 01:25:50:

Nike,

I can’t disagee with your basic concepts, but courts sometimes have a different opinion on what is “right”.

As I remember the original thread, I think I stated I wouldn’t do any lease signing as it could significantly muddy the waters. It’s certainly an unusual situation, but I think tangents saying Elizabeth should have known better do not provide any illumination on resolving the current situation.

IMHO, when a bank doesn’t record their deed promptly, future claims have some validity, because the question will always be “Why didn’t you record your deed?”

No predictions on how it may turn out, I just find the exercise useful. Thanks for responding, I like well thought out differing opinions.

import · May 15, 2006, 12:44pm

Re: House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 15, 2006 at 12:44:18:

Nike,

Please understand that I am neither "flummoxed or disturbed by basic questions? as you so eloquently state here.

I get the whole BFP issue, and you made your point. We have had lengthy and frequent discourse on the subject and, quite frankly, I cannot comprehend what you hope to achieve by continuing to pull me into your debates.

My ?claim? that I am retained by local investors to resolve title issues is a statement of fact. I short tax certs, mortgages and many times even get the mortgages discharged completely. I recently had a $350,000 mortgage discharged, which allowed my client to close.

Nike, you will be the first one I contact when this deal finishes and I will share with you what happens, okay?

Elizabeth