Collateral File Review

[Christopher Evans]

Hello BP Note Investors,

Recently had a bid accepted on a CFD in AL. Received the collateral files, reviewed myself for any red flags (break in chain etc) and then sent the files to the lawyer who was recommended by someone in the note world. To my surprise the lawyer wants a 30 yr search on title rather than the one owner search. I was told in AL this is the only way to get an insurable title. Also to note, it being a CFD, the lawyer seemed perplexed by the inclusion of landlord/tenant language. I was also told that because the mortgage does not contain a power of sale clause it can not go through a non-judicial FC. Am I missing something? Should we seek out other recommendations? Any advice would be greatly appreciated.

[Don Konipol]

Lots of confusion as to what a 'contract or deed' actually is.

First of all, much of the specific rights associated with this type of real estate contract depend on state laws, which vary somewhat.

Secondly, the seller of the contract, i.e. property seller/lien holder, hold LEGAL title to the property. The buyer holds EQUITABLE title. What this means depends on (1) the way the actual contract is written (2) whether the CFD is recorded or not (3) the state laws in effect at the time the CFD was executed (4) the state laws in effect now and (5) in Texas, as in some other states, what percentage of the sales price has been paid.

Unless an investor is VERY familiar with the laws of a particular state, it is imperative that an experienced, knowledgeable attorney render an opinion. A number of these transactions have ended in absolute disaster for the CFD lien holder.