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Updated almost 7 years ago on . Most recent reply presented by

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34
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Jim L.
  • Professional
  • Greater Seattle area, WA
18
Votes |
34
Posts

Fishy Quitclaim before foreclosure?

Jim L.
  • Professional
  • Greater Seattle area, WA
Posted

I've been looking at pre-foreclosure properties and came across one where heirs of the deceased owner of a many-years-abandoned home with significant equity were persuaded a couple of years ago, for substantial $, to quitclaim the property to an investor (the heirs think he is an attorney, but he's not).  The quitclaim deeds appear to have never been recorded in the subject county.  The property was conveyed to a living trust before the owner died, and one of the heirs appears to be the trustee.  The property is now slated for foreclosure auction some weeks away against the estate and heirs.  Something seems shady here even beyond the apparent impersonation of an attorney, particularly since the heirs could have immediately sold the home even 10 years ago for much more than they got for quitclaiming.   The quitclaim deeds erroneously indicate that the heirs received unbiased counsel regarding their options (but sheer ignorance may account for their approving that statement).  

So, my questions are:

1) Why would an investor go after quitclaim deeds before acquiring title?

2) Would the quitclaim deeds have any affect if someone simply contacted the trustee and bought the property?

3) Isn't the "attorney"/investor risking that someone will bid up the property at foreclosure?

4) How do such quitclaim deeds relate to or affect a purchase of redemption rights from the same heirs or trustee?

  • Jim L.
  • Most Popular Reply

    User Stats

    310
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    271
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    Tyler Mullen
    • Investor
    • Kirkland, WA
    271
    Votes |
    310
    Posts
    Tyler Mullen
    • Investor
    • Kirkland, WA
    Replied

    A living trust becomes an irrevocable trust automatically upon the death of the grantor, whether or not the trustee of the living trust actually does their job and converts it.  If what you say is true and the deed went into the trust, that's likely where it is now and maybe that's why it never sold or went to these "heirs", because the trust says it's supposed to go to the cat or something... or the trustee has no idea what they are doing and if they don't clean up their act they could get nailed.  A trustees fiduciary responsibility is a very serious thing and if they don't live up to it they can be in huge trouble, or the trustee IS living up to it... quite hard to know without a copy of the trust and verifying the property is therein.

    If there is still a probate going for this same deceadents estate... after 10 years that would be quite extraordinary, I had one that will last even longer but it has exceedingly rare and complicated circumstances.  Even a probate longer that 2 years is quite rare.  It took me about 6 years to get "... a fountain built in the city of seattle..." because the guy, unfortunately, didn't die with $14 million dollars.

    Signed qcds not recorded are useless afaik, usually a sign of attempted exploitation, or people selling deeds to property they dont own, (an oldie but a goodie in the fraud world) or medicaid planning that was never completed.  I've only done a single probate where the heirs signed qcds and that was for a series of trusts, many properties, a lot of money and a very complicated TEDRA agreement that was court approved.  Other reasons for heirs to do that, maybe for their own medicaid planning, I don't know.  If you bought the property from the trustee you'd likely get a bargain and sale deed, get your title coverage and then no, I don't see how old unrecorded qcds would have any effect on you at all.

    Figuring out the other liens and who's foreclosing would help you understand a bit more what's going on.

    Not an attorney. Not legal advice.

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