Deed of Trust owned by bankrupt company?

Question

I am purchasing a property in St. Louis that has a Deed of Trust being held by TransAmerica Financial Services, A California Corporation. That company is bankrupt, and that deed doesnt expire until 2031. What are my options here? It looks like in the 80s the past owner borrowed money against the properties and then that company went bankrupt.  I cant get a Deed of Release as that company is no longer around.

There are a ton of cases that went after them in the past before they were bankrupt for shitty lending practices.  Doesnt make me feel good about my 401K being with TransAmerica now, but thats beside the point.

https://caselaw.findlaw.com/mo-supreme-court/10922...

https://law.justia.com/cases/california/court-of-a...

https://law.justia.com/cases/arizona/supreme-court...

Anyone have any advice on how to handle this?

Joel Ray Cotton · Answer

Account Closed my title company only gave me that information above. They said my only option is to accept a title with TransAmerica being #1 on the title until it resets in 2031. No bank will allow that, at all.

Joel Ray Cotton · Answer

Account Closed that is where I am at now. Can you help me with where to find the search of jurisdiction, filing number and trustees phone number? Below is what I got from my title company so far.

19. Satisfaction and release of Deed of Trust executed by Marie Sutton, a single person, to trustee for

Transamerica Financial Services, a California Corporation, recorded November 4, 1996 in Book 10992 page

345, to secure $31,003.39 and any other amounts payable under the terms thereof. (prior owner) (as to parcel

1)

Account Closed · Answer

If your title company said that, I'd move on to the next deal.

Account Closed · Answer

I always use a title company. They have the knowledge and tools.

Account Closed · Answer

If the company that holds the deed is in bankruptcy, the property is part of the estate of the bankruptcy court. Don't buy anything that has a bankruptcy trustee without a written order from the court.

Do a search for the jurisdiction and filing number and look for the trustee's phone number. Call the trustee and ask for the status of the  case. If it has been "closed" or discharged" that is one thing, but if it is "active" you are taking on the US Government. Anyway, you can ask the person who answers the phone about a specific property and they may have current information or they can at least direct you to the proper person.

To save yourself all of that effort, order a title report and let the title company figure it out.

Joel Ray Cotton · Answer

@Tom Gimer thank you sir, that is exactly what I am asking for.  Now I am just waiting for Stewart to get back to me with the Indemnification clause.

Tom Gimer · Answer

@Joel Ray Cotton To push this forward, the title insurer insuring your purchase would request and obtain a letter of indemnity (LOI) from Stewart for this trust. If your title insurer happened to also be Stewart, they would simply agree to insure your transaction without an exception in your policy for the open trust... which they should do since they are already on the hook for it.

Joel Ray Cotton · Answer

@Tom Gimer Fun update, this property was purchased and went through a Title Company that somehow, someway didn't catch this and stated the title was clear and marketable. (Also that title company went bankrupt because the owners were embezzling money) Luckily that was insured through Stewart Title Company, which giving me a little flack because the owners title policy had him and his dad on the policy when the dad passed the title updated to the mom and owner but they didnt inform/update Stewart Title of the change. I am trying to get Stewart Title to pass through coverage to me.

Separate question, what would insuring over top of it, entail?

Apparently TransAmerica Financial got bought out by HouseHold Financial Corporation (A subsidiary of the original company who declared bankruptcy) and they have been known to not record the leins against the property, therefore releasing the lien and just mail the payoff statement to the owner. Then they sell the information to creditors who demand proof of payment which if not generated go after the amount of the loan. Talked to a couple people in the neighborhood and apparently TransAmerica hit the whole block in the 90s and keeps pulling this scheme.

Tom Gimer · Answer

2031 is not the relevant date... and BK would not affect the ability of a creditor to release a lien that was already paid (likely) or even accept a payoff (unlikely).

You're getting bad information. Move on to a title company who can clear this item appropriately or insure over it.

Michael Ealy · Answer

Joel,

It depends. If you intend to flip the property or sell the property prior to 2031, then you can't sell it since it has this cloud on the title.

However, if you intend to hold it as a rental, then by all means go through the purchase. It's unlikely the bankrupt company will assert its ownership of the property.

You can also hire an attorney to file something with the county that will announce your ownership claim to the property and whoever wants to challenge that can go forth and appear at a hearing. I am not an attorney so I don't know the exact name for this process but depending on the county and state where the property is at, I am sure there's a process to resolve this.