Salvaging bad flip (defaulted loan/taxes overdue)

[Karen Polis]

Seeking ADVICE / Property is in Norristown, PA

I lent money to somebody (a land trust) for a fix and flip. Unfortunately, I did not do my homework beforehand, otherwise I would have realized there are 4 other investors prior to me that were already defaulted on for their loans. The Land Trust has just been served for back taxes.

All five investors are now in touch with one another and we are trying to salvage this deal to the best outcome for all. At this point, we only want our original money back–we are not even expecting profits, although that would be nice.

One of the original investors is trying to get the property deeded over to him so that he can finish the deal, however, we just learned that if this happens, it could wipe all of us other investors out completely. Since I am the last in line on this, I am told that I am the one who should be foreclosing. Also, if the taxes are sold, then we are all out of luck.

I am willing to buy the taxes to keep it in our control, but I don't know where to go from there. We have tried to get in touch with the land trust owner and of course, he is ignoring us. He even ignored several attorneys letters sent to him in the past. At this point, my guess is that he has used our money to live on and is running scared. 

All five of us investors have legitimate contracts with paperwork that tie us to the property, so in that sense, it is not a scam. But we can no longer rely on the land trust to make this right. The investors have to band together and because we are all newbies (obviously the land trust owner knew this)–we are not sure how to handle it. 

Any advice from people who have actual knowledge in this area and not just conjecture from reading books would be wonderful. 

Thank you! Karen.