Real Estate Lawyer - Title Question

[Drew Nagda]

We currently have a house under contract with a motivated seller. I added a clause saying we will purchase the house contingent on a marketable title. However, the title was transferred to a family friend to avoid a $5000 lien about 7 years ago. Problem: the owner hasn't been able to track that individual down in 5+ years. The owner has been making all the payments on the loan (insured with the bank), and there's a more than 60% to pay on the loan still. 

We spoke to the bank and we are able to assume the loan. We plan on using this house as a rental, so have a flexibility on time to get the title straightened. The homeowner's main worry is to be able to pay the next 2 mortgage payments before he moves out of the country. I also wrote that I would give him a $5000 earnest money deposit 1 week from the contract signing date to be used towards those payments. 

Has anyone dealt with something similar / is it worth pursuing with the courts and lawyer? 

Numbers: Purchase @ $290k

Repairs: $25k 

ARV: $400k

Would this be a situation where I could use a quiet deed transfer? Any help would be appreciated!

[Christopher Phillips]

If the house was deeded to someone else, then the current "seller" doesn't have the legal authorization to sell the house, even if their name is on the mortgage... You'll have to track down the other person.

This type of thing happens a lot when people are trying to hide assets from spouses.