Creative Title Transfer to Land Title to Avoid Lien Attached to County?

Question

My lender just discovered a lien filed in 2019 against my husband in the county where I reside.  When I applied to consolidate my first and second mortgages with a new mortgage through a new lender, I applied alone but they wanted my husband on the loan/title of the property.  The title company obviously didn't do their due diligence if they had me sign a quitclaim deed over to myself and my husband to add him to the title in December of 2022.

Now that the lender discovered a judgment/lien against my husband and any personal property in the county, which he was unaware of, they are saying he lied on the application that they completed and sent over via docusign to add him to the loan.  All he did was sign the document per their request.

The lender's attorneys froze all my accounts (savings/checking/heloc - a total of approximately $350k in all) and sent me a letter stating I am in defauilt as of April 6, 2023.

I hired an attorney that says I can't file another quitclaim deed with myself and my husband putting the property back into my name alone, as it was before, that the lien would attach to the property no matter what.  Yes, it was filed in the county, but nothing was filed against the property. In the property records, there is only a deed of trust for the first and second mortgage.

I'm wondering if we can both sign a quitclaim deed over to a land trust directly, or if we can sign one back to me and then I can sign a land trust assigning an LLC established in Wyoming for privacy purposes as the trustee (and perhaps another LLC as the beneficiary of the trust).  I own other LLCs in Colorado but they have my name on them. I can establish another LLC in Wyoming if need be.  My attorney says no, but why can't it be that simple, to take him off of the title with a simple quitclaim deed that I can file in minutes rather than destroy my credit and take all my money?

Any thoughts or suggestions would be appreciated ;-)

Peter Walther · Answer

I'm not an attorney and never have been.  I'd need to look at all of the various instruments in the chain to have a properly informed opinion but from what I've read in your posts a few things come to mind.

I understand you purchased the property and received an Owner's Title policy.  Then you refinanced the property which presumes there was a prior mortgage possibly from when you bought the property.  At the time of the refi your husband was added to the title.  Now your current lender has advised there is a lien against your husband that predates the lender's lien and the lender is demanding repayment.

First, if my assumptions are correct, as Tom Gimer already wrote, the matter probably would not be covered under your title policy because the lien apparently attached after the Date of Policy and would therefore be excluded from coverage.  However, it never hurts to file a claim.  All the insurer can do is deny the claim.

Second, as Tom also wrote, if the lien has attached to the property there is no way I know of to convey the title that will not carry the lien with it.

Third, I assume the lienholder is trying to enforce the lien against the property, otherwise how did it come to the lender's attention?  Does your husband dispute the validity of the lien?  If so, he should advise the lien holder as to why.  If not, I think you'd be better off figuring out how to get it paid.

Next, if your husband disputes the validity of the lien, it may be possible to transfer the lien off the property by posting a bond with the Clerk of the Court.  If you don't have the cash to do so you may be able to find a bonding company to post the bond for a fee.

Next, if the money lent by your current lender was used to pay off a mortgage which had priority over the lien, there is a legal theory known as equitable subrogation that allows a subsequent lender to step into the shoes of the paid off lender giving the current lender priority over the lien.  Now this helps establish the lender's priority, but it does nothing to protect your and your husband's interest.

Also, if the property is your husband's homestead as defined by the state the property is in, there may be some protection from the lien's enforcement.

Lastly, If I were in your position, I'd probably be talking to a good real estate attorney who practices in the state and preferably the county where the property is and get actionable advice, rather than looking for opinions on BP.

Nathan Grabau · Answer

I am not a lawyer and this is not legal advice, but I would try to keep in mind that liens are legal and powerful tools. They serve a purpose and now that the property is in the line of fire of the lien, it is pretty much impossible to get it out. Trying to figure out how to hide an asset from a debtor could also imply fraud.

I personally do not think the lender or title company has any more responsibility than you to make sure your husband did not have a lien against him. I would say that level is equally at no responsibility to check this, because why would you?

It sounds to me like the only pathway you have to getting clear is to legally go after your husband for not disclosing this to you. There seems to be a break in trust here if he had a massive debt that he did not tell you about as he came onto your assets. I would consult an attorney, but it is probably possible to sue him over the financial issue, where you say, "I still love you and lets keep our marriage in tact, but you hid this thing from me and we need to separate our finances."

In summary, I would focus on either the claim that he did not know and focus on either: was he improperly informed of this? or did he improperly inform you? I think without civil action on one of those two things, you are not going to be able to get your assets back. I am so sorry that you are going through this.

Suzanne B. · Answer

I was referring to the decision makers at the bank, coming to an amicable resolution... not hoping black and white would change for me.

Peter Walther · Answer

I believe there are no miracles in real estate, there's only the law.

Suzanne B. · Answer

That is what is so disconcerting.  Because it puts everyone involved (the bank and my family, not just my family), I'm hoping and praying for some "work through" - which is why I'm reaching out to all you brainiacs.  I am literally praying for a miracle work through of some kind. Just to be clear, my faith is in the Lord, not BP ;-)  No matter what happens, we will be fine. It has never been about what we have or don't have... it's just that this was our retirement home and we "made it our own" but a house is only a house. Thank you for your response to all who have responded. I appreciate your input.

Wayne Brooks · Answer

@Suzanne B. I didn’t see what state this is in but everywhere I know of….when a judgment is recorded in the county records it Automatically attaches to any real estate owned, or later acquired, by that person. It doesn’t need to be “filed against the property”, as that is automatic.

Suzanne B. · Answer

That's precisely what I'm questionning here. It has not officially attached to the property.  Nothing has been filed against the property and the lien doesn't even know about it, yet the lender froze all my accounts and has notified me of being in default as of April 6. So, iin essence, they want to foreclose, take all my money and destroy my credit.

Last I spoke with my attorney, he had a long, long conversation with the bank's attorneys.  All the attorneys on both sides acknowledge it's not good for the bank and it's not good for me. I keep asking why isn't it as simple as removing my husband from the title? They say it's too late, once he has been listed, if the lienholder discovers this, they could potentially foreclose as they are in first position.

In the interim, I filed a QC deed with an LLC as trustee of my trust. Transferring our interest to the trust should have prevented this, but at this point I'm hoping it helps in some way (removing our names/interest in the property) or perhaps causes a delay in any proceedings.  Meanwhile, we are waiting for the decisionmakers at the bank to take heed to their attorneys' warnings - as it would be better for them to allow me to continue to make the automated payments from my accounts and reinstate the loans/accounts.  My attorney will get back to me once they decide, and I guess we'll go from there... but I'm praying that they simply hold the title company accountable in the event anything happens in the future. (Amen?)

Joel Case · Answer

She has the best lawyer in the state.

Peter Walther · Answer

I'm still not clear, is the lien holder attempting to foreclose?  To clarify, the lien attached to the real property as soon as your husband came into title, not the mortgage, but as I wrote above, it's possible your current lender's lien may have priority if its money paid off a prior mortgage but that doesn't help protect your equity.  I think you need to get the advice of a good attorney as soon as possible.

Suzanne B. · Answer

The lien is over $2 million and the mortgage is $1.6 and change.  Neither myself nor my husband has this in our back pocket.  Before even notifying us, the bank froze $350k before we had a chance to transfer funds to other accounts. Yes, I am listening to my attorney, but I am also continuing to look for answers. The lien has not "attached" to the mortgage.  It was filed before purchasing the home unbeknownst to either of us since it was purchased in my name alone. The title company did not do their due diligence, which is what I paid $1,900 at closing for them to do and now I'm at risk of losing everything, including my credit preventing me from buying another home anytime soon (and this was my retirement home!)

Creative Title Transfer to Land Title to Avoid Lien Attached to County?

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