Who owns this property given this situation?!

Question

My father and my uncle purchased a property (property A), for which they took out a "private loan". The "private lender" put a "lean" on a property my uncle owned free and clear (property B). After some time, the "free & clear" property sells; the title company who closes on the sale missed the "lean" of the "private lender". Later that year, the "private lender" puts in a claim to the title co, he gets paid and also signs over an "Assignment of Note & Mortgage" to the title company. I had to order an O & E report to find all this information because my father and my uncle never heard from the title company and the property still shows under their name in public records. My questions are as follows:

* Who owns the property (property A)?

* It's been 7 years since the "assignment of note & mortgage"; if the Title Company owns the property, shouldn't they have recorded it into their name with the county already?

* Can the private lender get paid for the claim and in addition "assign the note & mortgage"? At the time he gets paid (for his claim) shouldn't a "Satisfaction of Mortgage" be issued?

* Who should issue the "satisfaction of mortgage"? The Title Company?

I appreciate any insight. Thank you!

Dustin Haviland · Answer

@Val Simpson I work in the title industry and your situation is slightly unclear. I will attempt to make some assumption(hopefully accurate ones) for the unclear potion of your explanation. The lien that was placed on property B could have been (1) of (2) options; an unpaid invoice from the lender (not the actual mortgage) for outstanding costs incurred by the default. Or if the lender received an In Personam court order judgement, that would attach to any/all properties owned by the individual. But then again, that wouldn't be a lien that would be a judgement. Liens are only valid for (1) year from the date recorded. It's most likely option(2) and the judgement was paid by the title company for missing it when they transferred ownership of Property(B). Property (A) is still owned by your Father/Uncle with a note/mortgage held by the title company. The title company should have recorded the assignment. (1) Your father and uncle still own Property(A).(2) Title company should have recorded the assignment of mortgage and/or probably did record a release for the judgement.(3) Yes he can get paid for the judgement and assign the mortgage and still not satisfy the mortgage.(4) If the mortgage is truly satisfied, the satisfaction of mortgage is issued by the note holder, which as this point is the title company.It sounds like the title company is trying to recover the money they had to payout for missing the judgement by obtaining the mortgage. When your Father/Uncle go to the sell of Property(A) the title company will require the mortgage to be satisfied through closing which will be paid to the title company at this point. They are using a creative solution to force your father/uncle to pay the judgement after the fact.

Don Konipol · Answer

It is perfectly legal for anyone, including a title Co to purchase a promissory note. Please understand that the title company did not "pay off the mortgage", they merely purchased the lien holder position. No, there usually is no magic formula for getting out of paying off a secured debt.

Val Simpson · Answer

@Dustin Haviland Thanks for the information regarding time frames. This one was recorded after 1982. In the original recorded NOTE in 2006, it says that the loan should be paid in 15 years from said date. The Assignment of Note & Mortgage was executed in 2010 and it doesn't say anything about a maturity date.

Val Simpson · Answer

Thank you @Dustin Haviland . My uncle and father defaulted; that's when the private lender went after the property my uncle owned free & clear and came to find out it was sold (there was title insurance on that property). As a result, "private lender" contacts title company and puts in the claim and signs them over the note and mortgage. The Title co did record the assignment of note and mortgage ( i found this out in the O&E report I ordered). It shows the assignment was done for $10. The Title Company's title insurance paid for the claim/judgement. I understand what you are saying about a creative solution to force my father/uncle for repayment but is this legal? Thanks again for helping me shed some light.

Dustin Haviland · Answer

@Val Simpson Judgements expire 10 years from decree. Mortgage recorded before September 1982 expire 10 years after maturity date or 20 years if no maturity date is stated. After September 1982 they expire 20 years from maturity date but that is a very generic rule.

David Dachtera · Answer

@Val Simpson,Yeah ... talk to your attorney / title agent. That's a little too tangled to unravel via a forum post. Also, I'm not a legal or financial professional.

Val Simpson · Answer

Thank you @David Dachtera . One more thing, can the title company legally hold a note/mortage for a property that they paid out a claim? and if they hold the lien, why haven't they tried to retrieve payment or tried to foreclose on it? It's been 7 years. Is there a stipulation of time frame or could this go on indefinite? Thanks again!

David Dachtera · Answer

@Val Simpson,If there has been no foreclosure and the title has not otherwise been reconveyed, I would expect your father and uncle to still be the owner(s) of record, regardless who has the lien on the property for financing.Ask your attorney and your title agent.