Follow Up to Legal Issue Post

[William Hall]

Last week, I posted a question about a somewhat complicated legal issue surrounding a DOT that was part of my father's estate that never got recorded, then the debtor/prior owner was able to go back, refi the property and let it foreclose 3 years ago.

I want to thank everyone for their advice!

No luck yet in finding a real estate attorney that wants to deal with the case as it stands, but I decided to contact the title company directly to see what they had to say.

The first question from the title company was to identify an order number, which was blank. So the debtor nor my attorney ever even actually processed the deed through the title company. The title company informed me they have blank forms on their website; that's what he used. I did learn something new to share; if there was a order number, even if the deed never got recorded, then title would have been liable.

They actually advised me to still record/complete the perfection of the Deed of Trust, it will cloud the property's title, and I'll have to play a waiting game. They stated whoever owns the property now will not be able to refinance or sell w/o acknowledging myunsatisfied interest. They also stated the leverage is on my side since I can trace the current DOT back to a judgment that was recorded prior to any of the recent shenanigans. I hate to draw a new party into this, but then whoever owns the property now would have cause to go back at my debtor.

1. Are there any possible drawbacks I could run into?

2. After recording can I do anything with the DOT, such as use it for collateral, transfer the DOT into my business as a long-term asset, or should I leave it in my father's estate?

3. The title company said as beneficiary, I could not purchase title insurance since I don't actually own the property. Is that true?

4. Should I turn him in to the IRS, since borrowing $ and then defaulting is a taxable gain, and go for the bounty?

5. Should I contact him directly at this point, and make a one-time offer to settle this since I know he is actively working, and the Orange County DA has become interested in his activities?

[Wayne Brooks]

William Hall Good advice above. Since the DOT was never rcorded, obviously you're standing on a weak leg. As for the IRS, only If the lender Forgave the debt is there a tax liablility, and if they did forgive it, they've already sent a 1099 to the IRS.