All Forum Posts by: Daniel Hart

Bryan, no insults taken. However, I think anyone of us could be in this situation. Many here buy at courthouse auctions and rely on their closing attorney to verify title is clear. An unstable and hostile man claimed to have an interest that could never be proven and the attorney stated that it is OK to proceed and that we could get title insurance. I think that both new and seasoned investors alike would say let's move forward in that circumstance.

Tiffany/Bill, You've misunderstood the situation. I have no partner, I have no loan, I don't own the house, someone else does. My liability is that the closing attorney issued a warranty deed in my company name.

Bryan L., that's a silly comment. Obviously no one in this transaction knew about this level of complication before getting involved. It could just have easily been you. The closing attorney said title was clear - it was an auction purchase, there are dozens every day. Come on now....

Wendell, I think you are mistaken. Banks make mistakes, as they did in this situation. They should have gotten the signature of all owners. Since they didn't they can only foreclose on the ownership held by those that signed and I'm positive the same is the case in your state. Lien position is irrelevant.

Jon, The bank made an error and forgot to get a signature. It's not spelled out in the docs because they didn't know they messed up.

Tom, 75%/25% comes from the fact that 3 of the 4 owners signed the mortgage so that's all the bank could convey to the buyer. The attorney did the research because that's his job. I'm not a title searcher or title insurance company. I'd rather not post the security instrument, but I can tell you it is a standard deed of trust for our state and wouldn't have anything in it that would let someone know an owner is missing.

Jay, the 25% has been valued based on an appraisal, but that 25% owner is an *** and wants twice its value. All the parties want to cooperate except those that should be responsible e.g. the title company and the e&o company who won't help unless sued.

Wayne, the claim is valid and you don't have to serve someone just because they are on title, that doesn't make them lose their interest in a home. It was not obvious that this guy was on title because it was 20 years ago and he died a long time ago. His interest passed to his son.

Shawn, the bank won't make a loan with her signing the mortgage (not note) because they know they'll lose her interest in a foreclosure. There's a lot of misinformation about this piece on this thread. Source: I used to do mortgages.

Jay, allow me to clarify. The attorney gave the OK to proceed with title insurance after being unable to validate the claim made, and the buyer gave the OK to proceed after I told him that there is a chance of a future claim. I didn't advise anyone to proceed and didn't act as legal counsel. I just acted as the bidder since the buyer was not physically capable of placing the bid.

Jon,

An owner who didn't sign a mortgage wouldn't be providing his share as collateral, so in this situation he would retain his 25% interest and the bank would only be able to foreclose on the percentage of ownership that signed the mortgage. I'd have to check to see what kind of deed I received at the auction, but it's probably a special warranty deed.

Rick,

The buyers are contemplating the partition action and in my opinion it seems like the best route to go. They are leaning towards buying out the 25% owner but I think it's a mistake since he's asking for an excessive amount relative to the value of the property.

Wayne,

It was a trustee/foreclosure auction, one where days can pass between bids.

It does appear the person claimed to be the father is on title at the time of the mortgage, and it appears he did not sign the mortgage. So, aside from proving the actual rights of the son, it does appear that the claim has merit.

The attorney felt confident enough to prepare a warranty deed, but the E&O attorney feels this is meaningless and that we supposedly all knew what we were buying, even though we were told title was OK. The E&O attorney feels we received no expectation of title being OK.

I was pressured to place an auction bid on behalf of an acquaintance of mine. I didn't want to do it because I wanted the house for myself, but he told me he would hire someone else (and outbid me) if I said no. So, rather than lose the house, I choose to accept his offer. He agreed to pay me a set price for the house, and that the spread of what I get the house for (less than his fixed price) would be my fee. I had already placed one bid on the house, but at this point we agreed that I would represent him for future bids.

Shortly after I had placed that first bid I met with the owner of the house because we were trying to buy it direct from him and avoid the auction competition. The owner (who was very hostile and delusional) told me that even after the auction he would retain a 25% interest in the property because the mortgage that was being foreclosed on was missing a signature (his fathers).

I called the closing attorney that we planned to use for the auction purchase, and he researched the claim but was unable to prove it true. The attorney representing the owner was also very hostile and wouldn't give our closing attorney the necessary details to substantiate the claim of ownership. Our closing attorney said that it was ok to move forward and advised us title would be clear, and that we could get title insurance. In the meantime we had been outbid, so with this advice on clear title I placed another bid. We setup closing and at closing I warned the buyer that there is a chance that the prior owner could still claim he has an interest, and that he might have to file a title claim should the prior owners story be true. The buyer understood and told me he still wanted to proceed. We won the auction and did a double closing to convey the property to the new buyer (my acquaintance).

After closing the buyer was denied an eviction of the owner due to the ownership claim by the former owner. The clerk of court felt that the owner truly did retain 25% ownership and that the new buyer only received 75% ownership. The new buyer filed a title claim with the help of the closing attorney but the title company DENIED the claim stating that the attorney was responsible for the error because he did not properly explain the situation to them. The buyer then filed a claim with the attorney's E&O insurance who came back and said that they aren't liable for anything. The E&O company states that because a bid was placed prior to the closing attorney's title opinion that they (closing attorney and E&O) aren't responsible for anything. The buyer walked into closing expecting to receive title to a home, and walked out with only 75%, so we're all confused as to how the E&O company can legitimately deny the claim.

So, what it boils down to is everyone is pointing fingers at everyone else. The closing attorney did a warranty deed from my company to the buyer, and I didn't realize this at closing (only saw signature page), and so the buyer states that I might be liable for not delivering clear title. I feel I was upfront with everyone, and did what I was asked, so I'm frustrated that anyone would suggest that I am somehow liable for the mistakes of others.

I'm posting all this because I'm trying to help the buyer get through this mess. He has a huge hard money payment on the house and it's hurting him financially, and I'm of course also trying to ensure that I am not liable for the attorney or title company's error.

I know that many responses will be to seek counsel, and I feel like if I have to hire an attorney I'm already in a losing (financially) position. So any opinions are appreciated!

I'm drowning in insurance policy papers. I use Auto-Owners through an agent and I feel like I'm constantly being bombarded with mail. Plus, the invoices they send never have the property addresses, so I have no idea what it's for. I switch policies to paperless whenever I can, but when I buy a new property the mail starts coming again. I also switch back and forth to builders risk policies during renovations, and that's more paperwork again...

Has anyone found it easier to combine all their individual rental property policies into one policy? Do you have any recommendations on companies that handle that process smoothly?

My goal is to go travel and end this constant stream of mail and paper.

I use the private money for long term rental holds. 5-10 years or more..

If I was doing shorter term transaction this would be a good idea for me. However, I plan to hold my rentals for many years, and I'm not sure my lender wants to wait 10 or 20 years to get paid.