Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
I've been working with the seller for a long time and she is now ready to sell. I had an O & E run and it shows a DOT and a mortgage of $56,000 borrowed 33 years ago. The owner received the property in a divorce ten years ago.
Her attorney says it cant be sold unless the mortgage company - a Richard Gill Mortgage Company located in Texas, releases the deed on this Colorado house. The only way is that if I take it subject to the potential debt and the title company cant issue title insurance with the note being released. Seller assures me the 30 year mortgage was paid off 10 years early.
The Richard Gill Mortgage Company seems to have disappeared and there aren't any assignments of the note. Is this a dead deal now, or is there an alternative way around this? Thanks for any input - I seem to have hit the end of the road on a long deal.
Goshen, KY · Member since 2009 · 835 posts · 683 votes
9y
Burt - I would put the property under contract, and send it over to the closing attorney. You can't close until the title issues are resolved. That's why god made attorneys. Let them fix the mess.
That should come out of the seller's proceeds since it is their mess.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
9y
If you're buying it cash, you can proceed of you're willing to take the risk (I would likely). If you're using financing or trying to resell the property any time soon, nope.
I've been working with the seller for a long time and she is now ready to sell. I had an O & E run and it shows a DOT and a mortgage of $56,000 borrowed 33 years ago. The owner received the property in a divorce ten years ago.
Her attorney says it cant be sold unless the mortgage company - a Richard Gill Mortgage Company located in Texas, releases the deed on this Colorado house. The only way is that if I take it subject to the potential debt and the title company cant issue title insurance with the note being released. Seller assures me the 30 year mortgage was paid off 10 years early.
The Richard Gill Mortgage Company seems to have disappeared and there aren't any assignments of the note. Is this a dead deal now, or is there an alternative way around this? Thanks for any input - I seem to have hit the end of the road on a long deal.
So you can purchase the property subject to the lien. If the mortgage holder no longer exists then you can file a quiet title action to release the mortgage. You will need to contact an attorney. Also make sure there are no other liens and judgements out there.
Investor · Colorado Springs, CO · Member since 2015 · 40 posts · 40 votes
9y
@Burt L. As was stated above, you can purchase the property outright with cash subject to the lien. This way there is no title insurance or the protections that title insurance provides.
If you go this route, you can not refinance or sell the property until you clear the title. To clear the title you would have to file a quiet title lawsuit. However, if the mortgage company has gone out of business, you could probably clear title by default , as they will probably not file an answer to the lawsuit.
Goshen, KY · Member since 2009 · 835 posts · 683 votes
9y
Burt - I would put the property under contract, and send it over to the closing attorney. You can't close until the title issues are resolved. That's why god made attorneys. Let them fix the mess.
That should come out of the seller's proceeds since it is their mess.
Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
9y
It looks like the Richard Gill Mortgage Co became Gill Savings and then went through this list of acquisitions of its assets. If I click on the last one, it appears to be part of Bank of America now. Maybe they would be required to release the deed, though it may take longer than a Quiet Title action without an Answer being filed?
Might have to copy and paste this link if it doesn't work automatically.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
9y
@Burt L. don't put the cart before the horse. Get the property under contract and then work out the title issue and who has to do what to clear it. You will be surprised what paperwork the seller can come up with so that they can get that big check. They were likely mailed something when it was paid off. It may have gone to the ex and she doesn't want to talk to him. She might be more willing when she has those $$ in her eyes and just needs that one piece of paper to make it a done deal.
Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
9y
I certainly would have preferred to have the property under contract prior to working through the un-released lien issue. The sellers attorney recommended she not sign the contract until it was resolved, unless there was a provision that the seller could cancel the contract if a lien was found. My attorney said the reason for that was that the seller then could try to raise the price to cover the lien, and sell to another buyer, in the hot market. It was for a mortgage of 58K taken out in year 1984. I was at risk the deal would fall as the sellers attorney had forced the issue before the property was under contract. The rule of the road is to get the property under contract first and then work through any title matters.
In the end, my attorney located someone at the original mortgage company who agreed to sign an instrument stating that no monies were owed but the original note was long gone. I think they are used to getting these calls and make $125 each time. Most interestingly, the title company had already said they were willing to "not recognize" that lien and said they would issue title insurance anyway. My attorney was a little suspect at why they would be willing to do this, and said I may have issues on my resale if not at the same title company, or by any future seller after me- but that my liability would be limited to the increase in value above the amount of my policy. My view was that after dozens of closings at that title company they were willing to be helpful, but I did follow the attorney's skepticism on this.
Regardless, it was resolved and is now under contract. Thanks to all for another case solved with the help of BP!