Experienced Landlord needs help in how to close this deal quick!!

[Rich Vogel]

Hi All, 

So this is my situation. I got an amazing deal on a 3 unit that can actually legally be turned into a 4 unit Purchase price 137k and it needs about 40k in work. Home run. We were two weeks away from closing and my title company tells me that there are 2 old mortgage liens on the house that the buyer knows nothing about. The house was passed down within the family.  One of the liens is 50k I am not sure how much the other one is. My title company thinks that they are old mortgages that never got closed properly.  The banks no longer exist and no big company that took over them knows anything about the lien. So he was going to get a lawyer to take the steps to get rid of these which will take 4-6months.  I just got a call that said he was diagnosed with cancer and doesn't know how long he will live.  We are planning on getting a commercial mortgage on the property. He is willing to work with us on a solution as long as he gets money to pay for doctor bills. Any help on how to get this property would be greatly appreciated. 

Thanks

Rich

[JD Martin]

Originally posted by @Ryan Murdock:

@JD Martin Would a commercial lender loan money on a property that doesn't have a clear title? Seems to me that would be a deal breaker for them.

 None that I know of would loan money under those conditions. No one wants to be second position, much less third. Since no one knows the authenticity of those liens no one with any sense is going to loan any money on it without it being sorted out. I like the solution above if you really have to have it - let the seller carry the note and the risks while it is being sorted, and subtract the costs of cleaning up the title from the sale price. But someone has to pay for this, and it would likely be the buyer since the seller hasn't any money, and if the liens turn out to be real the deal is dead and the buyer is out his money (unless he gets a contract for full reimbursement if the liens are real, unlikely the seller would sign). 

Another possibility for the buyer: sign a contract with right of first purchase for the specified amount, and loan the seller the money to get the title cleaned up - the buyer works to get it cleaned up, with the understanding that the money either comes off the sales price when done or the seller has to pay it back if the liens are real.