All Forum Posts by: Tim Silvers

Quote from @Michael Quarles:

Future risk is always a concern however never a value in an appraisal.  Appraisals are based on the current condition.  They can have an “if this then that” value however it doesn’t affect appraised value.

Therefore if you’re selling at or below lender/buyer appraisal I would think you’re fine. 

This said; let’s assume escrow falls out.  Now you’re tasked with disclosure possibilities.  

I remember this exact conversation on a prior purchase and did use that disclosure requirement to lower the purchase price even though the value was justified by an appraisal. 

I have also negotiated to bond around future possibilities   These bonds use to be fairly cheap. 

Prior knowledge issue, yep. Went through that with a mold issue before.

Appraisal came in at purchase price. 

But the issue is whether I can convince the buyer's agent that it doesn't need to be fixed since everything's working ok now.

I am a week away from COE.

Buyer's sewer inspection report came up with the following:

"CAST IRON PRESENT: The age of the plumbing system should be taken into consideration. Cast Iron drain and waste lines typically have a 50 - 60 year life. Internal corrosion in the lines can and will affect the pressure and draining capabilities of the plumbing system at some point in the future. Major repairs and/or replacement should be anticipated - this could be in 20 years or 6 months, remaining life is indeterminable. You should consult with a qualified contractor to discuss options and costs for proper repairs.
Recommendation: Contact a qualified professional. Drain System: POSSIBLE DAMAGED LINE. There is one or more sections of possibly damaged/cracked drain line found under the home as viewed from the clean out at the front of the home. We recommend the repair of all damaged lines. It is HIGHLY recommended that a licensed plumber review review the findings and recommend any repairs necessary prior to the end of your due diligence period."

This was a major rehab ($160K) and I've already discounted the price $40K from ask.

After discussing with my contractor, since there is nothing backed up or leaking and the toilets and sinks are draining properly, there is nothing to repair or replace at this time. We did, however, replace some of the pipes with ABS. Furthermore, the report does not indicate any clogging. There are also separate plumbing inspection plans available. The buyer needs to understand that all older homes come with cast iron pipes and will all show aging over time, but as long as there are no issues with draining, it is not something we repair.

To address potential future problems, wouldn't a homeowner's policy and/or home protection plan cover any occurrences?

Buyer's agent has requested a CLUE report as part of the request for repairs on a flip property under contract.

I've asked my insurance agent to pull one, but he suggested to contact LexisNexis directly. That will take a couple weeks and delay the close.

Should I find another agent to pull one for me quicker?

Also, how would I order the report for just this property when LexisNexis is asking for personal information for a Consumer Disclosure Report on the order request form? This does not apply to my flip property which would not come up under my personal history since it is titled in an entity name, not me personally.

Suggestions? 

Quote from @Tom Gimer:

Quote from @Tim Silvers:

Quote from @Tom Gimer:

The fact pattern states the equipment was leased (owned by the solar company, not the property owner). That’s crucial. 

The solar equipment destroyed, there is nothing for the lender to remove. The lease is now unsecured debt… not a junior lien on the land.

So, the UCC-1 is now an unsecured debt against the decedent's estate, I assume?
Wood tile need in order to reconvey since the lien still shows up?
 

The unpaid lease may lead to a claim against the estate of the decedent but it’s not a title issue, IMO. 

Again, this is if the equipment was in fact leased. If purchased with financing and the security interest represented by the UCC was timely perfected, I would have a completely different opinion.

Upon further inspection of the Loan Agreement, there was likely a county fixture
filing required to perfect the lender's security interest.

"GRANT OF SECURITY INTEREST IN COLLATERAL. As consideration for the loan we are providing and to secure your obligations under this Agreement, you hereby grant to us a security interest in the following property (collectively “Collateral”):
all consideration received from the collection, sale or other disposition of the Collateralized Goods, including any payment received from any insurer arising from any loss, damage or destruction of any Collateralized Goods and any other payment received as a result of possessing any Collateralized Goods, or any other proceeds of Collateralized Goods."

In this case, the insurer denied the claim, so no payout, despite the surviving spouse filing a bad faith claim.

Given the above, it seems the question is as to whether the loan balance still falls under the decedent's estate as an unsecured debt (since there's no collateral) that has no bearing on the title  - or if it's secured under which the lender will refuse to terminate the UCC-1 filing until the loan is satisfied.

Quote from @Tom Gimer:

Quote from @Tim Silvers:

Quote from @Tom Gimer:

The fact pattern states the equipment was leased (owned by the solar company, not the property owner). That’s crucial. 

The solar equipment destroyed, there is nothing for the lender to remove. The lease is now unsecured debt… not a junior lien on the land.

So, the UCC-1 is now an unsecured debt against the decedent's estate, I assume?
Wood tile need in order to reconvey since the lien still shows up?
 

The unpaid lease may lead to a claim against the estate of the decedent but it’s not a title issue, IMO. 

Again, this is if the equipment was in fact leased. If purchased with financing and the security interest represented by the UCC was timely perfected, I would have a completely different opinion.

It is actually a loan, however, the panels are not attached to the property as is stated in the agreement:

"Personal Property. You and we both expressly intend that no portion of the Collateralized Goods will constitute a “fixture” attached to any real property, and that the Collateralized Goods will be removable personal property. You also agree not to take any action that might cause the Collateralized Goods to be treated as real property or as fixtures to real property. You agree that we may make a fixture filing, if we choose, provided that you and we agree that we may enforce rights in the Collateralized Goods under the Uniform Commercial Code and not under state real estate or mortgage law."

 Title says we need a cancellation of the UCC-1.

Need full replacement of tile roof, plywood already in place, 1300sf house in Las Vegas, single story.  

Quote from @Tom Gimer:

The fact pattern states the equipment was leased (owned by the solar company, not the property owner). That’s crucial. 

The solar equipment destroyed, there is nothing for the lender to remove. The lease is now unsecured debt… not a junior lien on the land.

So, the UCC-1 is now an unsecured debt against the decedent's estate, I assume?
Wood tile need in order to reconvey since the lien still shows up?
 

Quote from @Bill B.:

They should be paid off with the property’s insurance money. Otherwise from the estate’s funds, especially any from the sale of the property. That’s why the lien is on there, so when the property is sold they get their money. I’d probably try to pay asap before late fees pile up and they foreclose on the property. Is there a first mortgage or will they get the property free and clear?

I updated my post after your response, so you didn't get the part on the insurance. It is a very protracted and complex case, but I shall summarize best I can:
- husband caused the fire and committed suicide
- insurance claim denied due to arson
- wife filed bad faith claim against insuror under innocent spousal relief argument
- insuror still refused to pay claim
- wife exhausted all resources; abandoned further claims against insuror
- city deemed property uninhabitable and issued demo order (lien)
- property demolished along with the solar panels
- husband was the sole lessee of record on the solar lease
- wife submitted death cert to solar lease co.
- bank just recently issued cancellation of debt to wife for 1st mortgage
- wife wants to wash hands of it all and sell vacant lot to me

My discussions with the public adjuster I brought on the case was that since the property no longer exists, the solar lien is wiped out, but I'm not sure.

 

House was severely fire damaged and subsequently deemed uninhabitable and demo'd by the city along with the solar panels. In addition, the lessee of record is deceased. Death certificate was already sent some time back to the solar lease company. The surviving spouse (not on the lien) tried to file a claim for the fire, but was denied and settlement (complex situation). 

A UCC-1 lien still show in county records in the name of the leasing company. 

What is the disposition of the lien in this instance?

Quote from @Bill B.:

How long will it be vacant? Many policies have zero problem with 3-6 month vacancies. Insurance is super cheap in Vegas. For the last 20 years I’ve used almost exclusively Allstate with about 10% of my properties covered by American Modern. (They’re a little flakier about suddenly dropping policies without claims.) and Allstate has been awesome during my 2 claims. When I mentioned a new build would be vacant for 2-3 months they said that didn’t even need to be mentioned it was short enough not to count. 

 

Average vacancy term on a renovation project: 3-6 mos. unless severely damaged (i.e. fire). I haven't gotten a quote from my agent on any properties from Allstate. It sounds like what you're describing is a landlord policy as opposed to builder's risk or vacant dwelling policy:

 https://www.allstate.com/resources/landlord-insurance/what-i...