What are the chances of this? - Posted by Zack W

Posted by Nate(DC) on July 17, 2002 at 23:12:10:

While on face it sounds like you have a desirable situation, my guess is that someone screwed up and you should do more research before you start dancing around like a banshee.

I would start by going back to the seller and asking if she has any loan documents, coupon books, or statements, from this alleged mortgage. Preumably you would have those since you are going to be taking over payments. I would take those to the title company and ask them to investigate further and see if they can find this loan recorded somewhere. Maybe it was taken out under a different name. Maybe it was recorded against the wrong parcel. Maybe the clerk’s office screwed up and indexed it against the wrong name or parcel. Things like that do happen.

If they truly cannot find it, then I’d say you have a property with no liens against it. However, even if there is no lien against the property, there is still a debt in the name of the seller that has to be paid! The fact that the lien is invalid does NOT mean the debt is invalid; rather, it just means the debt is unsecured. If you fail to pay the debt, the lender WILL come back to the seller (and eventually, the seller will likely come back to you) seeking payment.

If you wanted to get a mortagage on the property, to pay off the old loan in the seller’s name, you could do that. Although I might suggest that is not such a good idea from a business stance, since you would be trading unsecured debt in someone else’s name [but for which you are liable] for secured debt in your own name…

I’d be interested to know how this turns out.


What are the chances of this? - Posted by Zack W

Posted by Zack W on July 17, 2002 at 22:56:44:


Here are the specifics of a deal I just closed, in which I need some questions answered.

1] FMV $140K
2] Seller deeded property to me for existing mortgage bal
3] Ran 2 title searches, NEITHER one of them show ANY liens
4] Seller verbally told me she owed $100k to Equity One
5] Title company wrote me a title policy for $140k

What the heck do I do? I mean, I went into this thing assuming there was a $100k 1st, now, after two title searches there are no mortgages recorded, and my title company has even given me a policy for $140k. Can the sellers lender come after me? Can the sellers lender do anything to me. What if I put a new 1st on the property for 80 LTV? What if, what if, what if… What would you guys do?

Zack W