How Will This Lawsuit Turn Out?

[Chris Seveney]

Looking at a non performing note for sale on the secondary market. This was originated by a private lender which is an instutitional player.

Some highlights;

1. Property is in Florida - 

2. Buyer John Doe acquired the property in October 2023 under his LLC from John Smith for $1M. There is a recorded warranty deed on title.

3. Buyer refinances property with Private Lender in March of 2024. and receives $1.1M (money for rehab ARV $1.7M) (recorded in March)

4. In December of 2024 John Smith the former seller files / records an affidavit saying he sold the property via contract for deed (no record in court records yet of alleged CFD) and the borrower had a one year balloon on the CFD for the $1M purchase price.

5. Mid January John Smith Files lawsuit against John Doe and LLC

6. End January Lender files foreclosure action against John Doe and LLC (Borrower)

TLDR Version

Guy buys property end of 2023, seller gives him warranty deed and says "he was not supposed to record it", well why did you give it to him? He records it, gets a $1M loan to renovate the property and prior owner sells saying never got paid.

No info yet available on those original closing documents, was money transferred at time of sale etc.

But this will also be a very interesting title claim - so when people wonder why title insurance is needed - here is a perfect reasoni as people doing unrecorded CFD's etc. left and right - we are seeing more and more title claims.

[Mike Grudzien]

What a mess!