Mark Torok Subject-To Stance

[Bryan Hancock]

Has anyone reviewed Mark Torok's "program" for taking title subject-to? I know that this mostly ties in with Phill Grove's AMPS program, but some of the folks I have talked with recently recommend it for informing the lender about the sale such that they can't call the note at a later date. Has anyone reviewed Torok's opinion about *this portion* of the legality and the lender's right to call the note due?

I found this opinion letter for what it is worth:

Opinion Letter

I can't tell that Torok addresses the rights of the lender to call the note based on the letter above.

[Bill Walston]

Originally posted by Bryan Hancock:

Would you mind expanding on your estoppel point above Bill? I have heard of informing the lender preventing calling claim several times on BP, but I have yet to see the legal dots connected.

Estoppel, in very broad terms, is a legal principle that bars a party from denying or alleging a certain fact owing to that party's previous conduct, allegation, or denial. The rationale behind estoppel is to prevent injustice owing to inconsistency.

Estoppel may arise when one person gives a warning to another based on some clearly asserted facts or legal principle, and the other does not respond within "a reasonable period of time". By acquiescing, the other person is generally considered to have lost the legal right to assert the contrary.

I think the folks to whom you have been talking feel that estoppel would, in theory, preclude the lender from bringing an action to accelerate the loan since it knowingly failed to claim or enforce its legal right to accelerate at the time it was informed of the transfer of the property.

This doctrine is closely related to the concept of statutes of limitations, except that statutes of limitations set specific time limits for legal actions, whereas under estoppel, generally there is no prescribed time that courts consider "proper." In general, the longer it takes for the lender to attempt the loan acceleration the more likely it would be that a court would rule against it. But you never know :)

As I said before, I favor informing the lender of the transfer so it cannot claim that the subject to seller and purchaser committed mortgage fraud by not disclosing a material fact (the property transfer). If the lender is estopped from accelerating the loan at a later date, all the better.