Lien placed on my own foreclosure by myself???

Question

Ok, basically I want to preface this by saying I am not crazy but questioning the process a bit. I am a real estate investor who has decided to roll over on a little more than 5 million in homes. I am up late tonight because I am bugged by one thing...One of my builds was financed by a local investment company and for whatever reason they were bent on not giving me the money to build my mammoth four car garage with a full 1200 square foot studio above it. This garage cost me 120K and all out of my pocket. So I guess I am getting a bit bitter that all these slack asses put liens on my home over an above the bid amount and here I am carrying 120K of money and cannot do anything about it...or can I is the question? I financed this under my personal credit and built the garage under my business investment group. Any thoughts? I know this sounds ungrateful and I wish the market would have held so I could keep up payments of over 20K each month but after a year and a half of this we simply ran dry. Without builders placing their necks on the line there would be no community to live in.

Ryan Webber · Answer

If the question you're referencing is the foreclosure question, the answer is if they already have a lien on the property, then, no, you can't put a lien on the property now, foreclose, and wipe their lien out.  Your lien would be a junior position lien, and junior position liens don't wipe out superior liens when they foreclose.

Now that I'm saying that, there is one angle.  In some state's unfiled mechanics liens can precede or take superior position even though they weren't filed before other liens if the beginning contract date for the mechanics lien was before the superior lien was filed.  I don't remember all the specifics and I think it might just be for homesteads.  There are multiple specific regulations that have to be followed for the lien to be valid, and if it is an option in your state it would probably include committing fraud on your part.

On a side note again, I misread some of your original post.  I thought your 4 car garage was for your personal house.  On that particular point, its a little different in my mind if you were pumping your savings into your business.

Be aware that when you do let that $5 million in houses roll over, those lenders are probably going to come after whatever you have left.  I would be surprised if they don't put judgments against you for whatever their losses were.  From that point its more about your state's laws with how far they can go to get their money, but you might want to look into that if you already haven't.

Jeff Allen · Answer

Ya, I see your point but even though you repeated my personal mirror conversation when I beat myself up over this (get in line I know) your reply is a bit obvious isn't it?? What is obvious to me is you may not have the answer to my question in your experience. Try again if I'm wrong. I still have plenty of money so my pot is fine to piss in and it flushes!

Jeff Allen · Answer

wow...after that I'm sure his one and only post (this one) will be his last  :roll:

Couple of "Talks"

Ryan Webber · Answer

I didn't mean to be rude or crash, and I would never want to run someone off.  I'm also not the type to cry with you when you shot yourself in the foot.  It bothers me deeply when I see people who fail from their own mistakes and then want to blame everyone else for it.

Taking responsibility is key to any success in life.  If you blame others, you take away your ability to change things.  If its someone else's fault then you can't do anything about it.  When you accept responsibility, you empower yourself to be able to do something about it.  You empower yourself to succeed.

The truth is that there will be investors that will make millions of dollars from the market falling apart.  They will be multi-millionaires in 5 or 10 years from positioning themselves correctly right now.  They saw it coming and set themselves up for it.  Now in 10 years most people will look at them and say they were lucky or they have the Midas touch, but the truth is those investors understood what was happening and CHANGED their investment strategies.

What works today might not work tomorrow, and you have to be ready and willing to adapt and change.  If you don't change and the market rolls over the top of you, who's fault is that?

Shaun Greer · Answer

wow...after that I'm sure his one and only post (this one) will be his last  :D

Ryan Webber · Answer

First in time is first in line.  If they already have the lien on your property then they have first position, and you aren't going to be able to take that away from them.  Even if you put a lien on the property now, it will be in second position.  So if you foreclose, first lien position stays in place.

You might check into your state's homestead laws.  I know in Texas you have some lien protection with your homestead, but its different with every state.

On a side note and not to be rude, but you made the statement that the investment group was bent on not giving you the money for whatever reason.  Frankly, it seems like they made a wise decision.

You DO sound extremely ungrateful.  It seems like you have made a large amount of money over the last couple years, but very soon you won't have a pot to piss in.  You had an incredible opportunity to set up you and your family for the rest of your lives, but instead you decided to over extend yourself financially while you foolishly thought that the good times would never end.

That is your fault.  Not the market's, not the community's, not the government's.  Yours.  I know it sucks, but take responsibility.

Builder's have one of the highest bankruptcy rates in the country.  They don't understand that the market changes.  It won't always be good, and it won't always be bad, and if you are making a ton of money right now it will NOT last.

You really needed to be investing that money into things that would hold up when the market slowed.  Instead you increased your life style.  Instead you put your savings into a mammoth 4 car garage with a full 1200 square foot studio above it.  Instead you are paying the price now.

You have a long road ahead.  Taking responsibility is key.  That is the only way you will be able to constructively take from this experience and learn.  I would hope that if you do ever find yourself on the top again that you would have a very different outlook next time.