Seller Financing gone wrong? Any attorneys here?

Member since 2019 · 15k+ posts · 11k+ votes

2y

Go to a lawyer and ask them for advice. NOT a lawyer, but if your name was on the title and your ex signed papers and but you didn't; it shouldn't have been legal in the first place. Your divorce attorney should have put a stop to it as soon as you told them about it.

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V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

Definitely consult a lawyer, and not BP. Trust me you're not the only one with a deranged Seller Finance deal. This is becoming very popular, I've heard more private lending/seller finance stories in the last 10 days than I did ever before. These chickens are coming home to roost.

If I could start being a bid on these notes, man I would make a fortune.

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

2y

@Verna Medlin

Go to a lawyer as if you are not on the contract but on the deed it is an invalid contract - BUT if you are accepting payments then they have a claim against both of you

Your attorney will probably say return all the $ collected if you want out of the deal or clean up the paperwork and make it a legit deal. Cannot have your cake and eat it too (take the payments but then say invalid contract)

If it’s a contract for deed (which sucks in Missouri as it would have been faster to have a traditional deed of trust and note), it may state they are responsible for upkeep of the property

But if there are no violations and they are making payments you will have a difficult argument to take property back

As mentioned get an attorney

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Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

2y

Check the language in the LC to see if anything about maintaining the value of the underlying asset (property).

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

2y

Quote from @Chris Seveney:

@Verna Medlin

Go to a lawyer as if you are not on the contract but on the deed it is an invalid contract - BUT if you are accepting payments then they have a claim against both of you

Your attorney will probably say return all the $ collected if you want out of the deal or clean up the paperwork and make it a legit deal. Cannot have your cake and eat it too (take the payments but then say invalid contract)

If it’s a contract for deed (which sucks in Missouri as it would have been faster to have a traditional deed of trust and note), it may state they are responsible for upkeep of the property

But if there are no violations and they are making payments you will have a difficult argument to take property back

As mentioned get an attorney

depending on the debt instrument used virtually all of them have what is called EVENTS of DEFAULT.

These include:

Non payment of mortgage when due.

Non payment of Tax's and or insurance.

WASTE and that is what you have if you can easily prove it.. You can start a foreclosure for waste.

Its a pretty rare instance this happens but it is in most debt instruments.. All the other he said she said about the deal is something a lawyer would have to suss out.. I have a really good lawyer in KC market that just did a complicated quiet title action for me and we won and she got it done in record time for a Record Low price for us.. Happy to make a referral..

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Verna Medlin

OP

Member since 2024 · 5 posts · 1 vote

2y

Thank you all for the advice. I'm not sure how I will go about doing it but somehow I will find a way to protect my investment. If nothing else, maybe a lawyer would take a percentage of ownership in the property as payment for getting this all straightened out. Then I could pay it off over time to regain my full ownership in the future.

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

2y

They are not the "buyer". They are the "owner." You have sold the house. You are no longer the owner.

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Verna Medlin

OP

Member since 2024 · 5 posts · 1 vote

2y

Quote from @Russell Brazil:

They are not the "buyer". They are the "owner." You have sold the house. You are no longer the owner.

I did not sell the house. It was the "buyer" and my ex who did a seller financed sale behind my back. Shouldn't that be illegal. How can it be sold behind my back when my name is on the deed? The original deed was husbands name AND wife name not husband OR wife. Doesn't that require BOTH signatures to sell?

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Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

2y

Quote from @Verna Medlin:

Quote from @Russell Brazil:

They are not the "buyer". They are the "owner." You have sold the house. You are no longer the owner.

I did not sell the house. It was the "buyer" and my ex who did a seller financed sale behind my back. Shouldn't that be illegal. How can it be sold behind my back when my name is on the deed? The original deed was husbands name AND wife name not husband OR wife. Doesn't that require BOTH signatures to sell?

Then it sounds like your ex had committed some serious crimes. Why have you not then reported her to the authorities? You not taking action on this could potentially create issues in getting your property back. Id suggest filing criminal reports with the appropriate authorities asap.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

2y

Quote from @Russell Brazil:

Quote from @Verna Medlin:

Quote from @Russell Brazil:

They are not the "buyer". They are the "owner." You have sold the house. You are no longer the owner.

I did not sell the house. It was the "buyer" and my ex who did a seller financed sale behind my back. Shouldn't that be illegal. How can it be sold behind my back when my name is on the deed? The original deed was husbands name AND wife name not husband OR wife. Doesn't that require BOTH signatures to sell?

Then it sounds like your ex had committed some serious crimes. Why have you not then reported her to the authorities? You not taking action on this could potentially create issues in getting your property back. Id suggest filing criminal reports with the appropriate authorities asap.

If the sale went through a title company then you have a title claim. As title missed it and should never have closed it if in fact you were a vested owner at the time of sale.

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

2y

I agree with Russell and Jay. As soon as you found out, you should have gone to a lawyer-including the one who handled the divorce. Get it sorted now and be prepared to pay back the person who has been paying you money for it.

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Verna Medlin

OP

Member since 2024 · 5 posts · 1 vote

2y

Quote from @Theresa Harris:

I agree with Russell and Jay. As soon as you found out, you should have gone to a lawyer-including the one who handled the divorce. Get it sorted now and be prepared to pay back the person who has been paying you money for it.

Are you telling me that I have to let the "buyer" pocket thousands of dollars of rental income plus refund all the rental money they forwarded to me? That sounds like total theft of all the rental income that should be mine. This has been going on for 6 years! That is thousands and thousands of dollars he's pocketed, he "sold" the house at least once, tried to sell off some of the land. This is a huge mess.

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

2y

Quote from @Verna Medlin:

Quote from @Theresa Harris:

I agree with Russell and Jay. As soon as you found out, you should have gone to a lawyer-including the one who handled the divorce. Get it sorted now and be prepared to pay back the person who has been paying you money for it.

Are you telling me that I have to let the "buyer" pocket thousands of dollars of rental income plus me refund all the rental money they forwarded to me? That sounds like total theft of all the rental income that should be mine.

The buyer isn't going to let you take it back without giving them something. They made the payments that were laid out in the contract and paid that money to you. They are going to want some of that money back. If there was interest charged on the loan, then it may not be a lot of money.

Imagine you borrowed money from a bank and they repossessed it because you weren't taking care of the home. Would you simply give them the keys and walk away? I doubt it. You'd want some of the money back.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

2y

Quote from @Theresa Harris:

Quote from @Verna Medlin:

Quote from @Theresa Harris:

I agree with Russell and Jay. As soon as you found out, you should have gone to a lawyer-including the one who handled the divorce. Get it sorted now and be prepared to pay back the person who has been paying you money for it.

Are you telling me that I have to let the "buyer" pocket thousands of dollars of rental income plus me refund all the rental money they forwarded to me? That sounds like total theft of all the rental income that should be mine.

The buyer isn't going to let you take it back without giving them something. They made the payments that were laid out in the contract and paid that money to you. They are going to want some of that money back. If there was interest charged on the loan, then it may not be a lot of money.

Imagine you borrowed money from a bank and they repossessed it because you weren't taking care of the home. Would you simply give them the keys and walk away? I doubt it. You'd want some of the money back.

OK Ladies :) if the buyer closed through Title company like they should have and got title insurance and the title company missed that the MRS needed to sign.. the BUYER has a title claim and they will come in and settle this for everyone.. U gals are just speculating Need to unwind this how it actually happened and if there was a transfer of title that was or should not have been allowed and if there is insurance for the buyer.. Thats why you buy title insurance in the US of A.

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

2y

Quote from @Jay Hinrichs:

Quote from @Theresa Harris:

Quote from @Verna Medlin:

Quote from @Theresa Harris:

I agree with Russell and Jay. As soon as you found out, you should have gone to a lawyer-including the one who handled the divorce. Get it sorted now and be prepared to pay back the person who has been paying you money for it.

Are you telling me that I have to let the "buyer" pocket thousands of dollars of rental income plus me refund all the rental money they forwarded to me? That sounds like total theft of all the rental income that should be mine.

The buyer isn't going to let you take it back without giving them something. They made the payments that were laid out in the contract and paid that money to you. They are going to want some of that money back. If there was interest charged on the loan, then it may not be a lot of money.

Imagine you borrowed money from a bank and they repossessed it because you weren't taking care of the home. Would you simply give them the keys and walk away? I doubt it. You'd want some of the money back.

OK Ladies :) if the buyer closed through Title company like they should have and got title insurance and the title company missed that the MRS needed to sign.. the BUYER has a title claim and they will come in and settle this for everyone.. U gals are just speculating Need to unwind this how it actually happened and if there was a transfer of title that was or should not have been allowed and if there is insurance for the buyer.. Thats why you buy title insurance in the US of A.

True. There are also two separate issues-the 'sale' without everyone on title signing off and the condition of the home and late payments.

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Peter Walther

Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes

2y

There are a lot of facts about your situation that are missing from your story that are needed to make an informed opinion, therefore, I believe it's not reasonable to expect to receive any actionable advice on BP.

Since you also write you're in your 70's, I suggest you look for an attorney, or a recommendation from a federal, state, local agency or private interest group (AARP comes to mind) for an attorney who specializes in elder abuse cases.

Good luck.

1 Reply

Verna Medlin

OP

Member since 2024 · 5 posts · 1 vote

2y

There was no closing. No title insurance.

The "buyer" has collected thousands of dollars in rental income since him and the ex signed a paper agreeing to the sale. There was never a transfer of the deed to the "buyer".

Imagine this scenario.

1. You own a rental house.

2. You are tired of dealing with renters and repairs.

3. You tell your friend you'll sell him the house with owner financing and walk away.

4. You & your friend write up a deal between the two of you, hiding this deal from the wife who is on the deed with you.

5. Wife had no intention of selling the rental house as it is an investment to supplement retirement, eventually being her childs inheritance.

6. You tell your wife that you have a good property manager taking care of the rental so nothing to worry about.

7. You and wife get a divorce and you give her the house in the settlement.

8. Wife totally is happy to keep the property manager in place since she lives several states away.

9. "Buyer" has been collecting rent for a few years, sending wife a set amount of said rental income, keeping the rest for himself.

10. A few years later wife is passing thru the area and drops by to check out the house. This is when the current renter informs wife that THEY are buying the house from the owner (who is the property manager!)

11. Wife talks to property manager who informs her that he bought the house on payments from her husband before the divorce.

12. Wife is shocked and mad that she was lied to, that this "deal" was done years ago behind her back and the supposed property manager has allowed the house to severely deteriorate to less than half its value.

So now what does wife do when she can't afford to hire a lawyer to straighten out the mess?

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Tom GimerBusiness Member

DMV · Member since 2017 · 3k+ posts · 3k+ votes

2y

@Verna Medlin The first thing I would do is order a title search to determine what the land records reflect as to ownership of the property. If there is fraud or forgery in the chain of title that should be apparent.

Perhaps a family law attorney opens back up the divorce case and pursues the ex to judgment, perhaps a real estate litigator gets involved on a contingency basis or even deferred hourly if he/she can pursue treble damages for fraud, etc.… who knows. But first determine who did what and how.

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Richard Elvin

Investor · Cleveland, TN · Member since 2016 · 279 posts · 187 votes

2y

@Verna Medlin "So now what does wife do when she can't afford to hire a lawyer to straighten out the mess?".
There are answers here from people much, much more experienced than I, so take anything I say with a grain (or several) of salt.

I see a few options:

1) Check with the local DA on your options for pursuing your ex for fraud. What you've described, not a lawyer so just opinion, sounds like fraud. Check with several attorneys, including the local DA's office. There may be resources for you, legal aid, etc. Personally I would do this first regardless of my next move. I would also ask the DA, hypothetically of course, what would happen if I then did option 2 or 3 and the ramifications of such.

2) Nothing. Keep getting the rent checks from the "property manager". (Personally, this is not a route I would take, but everyone is different and sometimes the stress of dealing with something isn't worth the financial return)

3) Contact the other injured party in this nightmare, the "tenant" that is being sold your house. They may have entered the purchase agreement in good faith, not realizing they are being defrauded. There are a lot of youtube influencers that make these scenario's sound like they are perfectly normal, even though they verge on, or are, outright fraud. The "tenant" may have more resources to pursue a fraud charge. Remember that they are, at least it's likely, a victim in this too. How would you feel in their shoes? They think they are buying a house only to find out the person selling them the house isn't actually the owner. Use verbal judo to help the tenant see that you both are victims. Use statements that identify with them, "Yes, I am also angry at "PM/Ex/etc"! I really can't believe they did this to you! I know, right, we've really been defrauded!". This can help redirect their anger away from you, to the person(s) that committed fraud, and get them to identify with you, ie, "We need to resolve this" vs them thinking "You're trying to take my house". You want them, by the end of the conversation to realize you are an ally working against the one's that defrauded you both. (I worked in customer service previously, verbal judo is a required skill IMO)

4) Go nuclear. Evict the "tenant". If they claim to have ownership advise them that they are the victim of fraud and that the house is legally yours. Ask to see any paperwork that has your name, the one you've stated is on the deed, on the contract. If you've already attempted option 3, this shouldn't be a surprise to them. Let them know that you are very sorry that they are a victim of fraud and that you will be glad to do anything in your power to assist them in legal restitution, but you are not the one that defrauded them. This will likely kick of a flurry of lawsuits, so expect that. (This is the route I would take, push the problem back to the one's that created it in the first place. That said, this route is likely to be time and energy consuming as well as stressful.)

Just my thoughts. The idea being that if you can't find an attorney that will help without money out of pocket you can't afford, then move to recover your house and let the other victims respond.

I would talk with an attorney first, because I don't really see a scenario where you're not going to need an attorney. (maybe option 2) Whether you initiate a lawsuit, or move to evict and then are sued, you're likely to end up in court.

I really feel for you in this. It sucks when other's actions impact our financial well being. Keep in mind you are not the only victim here, the current "tenant/homebuyer" is also a victim.

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Alan AsriantsBusiness Member

Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes

2y

Wow crazy story. Why did you want to foreclose on the house in the first place? Not that it is super important, but curious here as to why that strategy stood out. Usually foreclosure is the last resort

With that aside, the biggest issue here is that a lease was signed without your consent as the owner of the property. While it is not going to fix the damages casued by the tenant, the real legal action should be against your EX. They committed fraud by hiding the fact there was another owner.

The Buyer under the seller finance deal might be ok, unless they are direclty breaching the contract. That being said, you need to contact an attorney ASAP and explain to them this situation. Unfortunately no other way of going around this.

The Attorney is likely to go after your ex, but if they have nothing to pay up with, its likely they will be subject to criminal charges, but you might not see much come from them to you.

Best of luck this is a tough situation

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

2y

Quote from @Verna Medlin:

This is going to sound like a bad soap opera, but here goes...

What happens if you have a property sold on seller financing and the buyer uses it as a rental. BUT... the buyer turns out to be a slumlord who is allowing the property to deteriorate so bad that the house will soon be unlivable? (Broken windows, heater broken, leaking water pipes, electrical problems, holes in walls, rotting porch, among other damages.)

The buyer continues to make payments, but if they stop then you have a ton of repairs before you can rent out the house. And I have the disadvantage of living in another state.

So my question is How do you handle a situation when it's obvious that the buyer is not keeping the maintenance up on the property?

I wanted to foreclose a couple years ago but was told I can't foreclose as long as payments are being made. Is damages a reason to foreclose? How about constantly late payments? (only 2 or 3 weeks late, not accumulated months.) Behind on property tax? (almost lost it to a tax sale because the buyer did not pay the property tax for 3 years!)

The house is in Missouri. The deed is in my name. My ex made this contract behind my back when we were negotiating a divorce, (he knew I was getting the property in the divorce). I never signed the contract (my name was on the deed at the time). The contract is for less than half the value of the home at the time it was signed (I'm pretty sure ex did that on purpose in retaliation for me winning the house in the divorce). Am I still obligated to honor that contract? I was under the impression that the "buyer" was a property manager until last week when I found out he has this contract and is claiming to own the house.

I know this is a lot and I need to see a real estate / contract lawyer, but I simply can't afford to go that route. I'm in my 70s living on social security income plus the small property payments I'm getting on the house. (No sympathy please, this is simply the facts.)

Oh, and the current tenant in the house thinks they are buying it from the buyer. AND my buyer tried to sell of part of the lot for cash. (no idea how he intended to supply a deed for that!) That is also a problem that needs to be dealt with. In addition, the "buyer" is the county sheriff so in essence, I'm fighting a battle with a local cop while I'm the outsider!

I know this sounds unreal, but I swear, every word is solid gold true.

what did you end up doing?