All Forum Posts by: Nancy Roth

@Tom Gimer 

Wow. That is breathtaking. 

@Wayne Brooks @Jim L. @Russell Brazil @Ned Carey @Ray Slack

Can anyone guess from this proceeding conversation which role I occupy in this transaction? Would anyone care to guess?

@Tom Gimer You are very smart and I'm coming to you next time with a settlement. Well, I didn't mention that the tax lien auction was a "discount" tax lien sale--I didn't know it was relevant. Are you familiar with those discount sales? Those don't happen every year in DC and they are reserved for the worst of the worst properties that the City can't get off its books bc the liens are greater than the value and no one will buy them. So this occasional sale is like a safety valve for the City to clear out the problem properties.

Long story short: the seller paid no liens on the property after it came out of foreclosure. So the title insurer had no beef with the amount of tax due.

Wondering if you would have refused to insure had this come to you immediately after foreclosure, free of liens and ready to go. 

@Ray Slack Around 5-6 months for the court to get around to it. 

@Tom Gimer You are 100% right for sure. 

@Ned Carey Yes, those good-for-nothing tax lien investors!  So Ned, as usual I'm looking to you for some free education. You bring properties for foreclosure all the time. Has anything like this ever happened with one of yours? All this would have been avoided if the normative foreclosure process had turned up those foreign liens. If this happened to you would you think the foreclosure process had been incomplete? Should a foreclosure in one jurisdiction routinely look for liens in others? One thing I'm taking away from this case is, wow, this long, drawn-out foreclosure process is not even trustworthy. 

Also I'm not sure anyone caught something I mentioned about this, but the liens were against the prior owning *entity* not the *property*.  The *entity* had been defunct for years but the liens against it were still in force. The title attorney thought the holders of those liens could enforce them against the prior owner's foreclosed property (very unlikely), so declined to issue title insurance. 

@Jim L. Just wanted you to know you were included in my answer above but the link didn't come through. In case you'd like to comment again. Thanks.

Hi, there, @Wayne Brooks, @Jim L., and @Russell Brazil, thanks for your comments. I left out some of the gory details, which I'll supply here. I'm interested to see if they change your minds.

(1) This was an off-market contract for an unlisted property. The original contract signed by both parties is not a standard realtors' association contract for DC,  though I'm happy to shoot you a copy of one, Wayne, if you message me your email address. Obviously I can't show it to you but I'm sure you've all seen similar, shorter, private contracts.

(2) Property is a shell gained through a tax lien auction in Washington DC and had just come through foreclosure (took nearly 2 years in DC). Seller had just received the deed when buyer made offer. 

(3) Buyer's title company had a problem and was unable to close. Buyer requested and was granted an extension of the contract and switched title company.

(4) Second title company took a very long time--past closing date--to issue a decision to NOT insure title, due to outstanding lawsuits against the prior owning entity filed in a "foreign" court, (neighboring Maryland county). The liens on the entity had not shown up during DC foreclosure, which focused only on liens on record in DC, and only against the property, not owning entity.

(6) Seller was forced to go back to court to clear the remaining liens. Seller notified the buyer that the contract had again expired. Buyer did not respond. Seller incurred multiple additional costs during court process, including the mentioned fine due to buyer's unauthorized changes to property.

Does any of this information affect your thoughts about how this dispute should be resolved? Russell, this was not an MLS listed property--do the MLS rules still apply?

Hello, friends,

I'm going to describe a dispute without revealing my role in it. Truth is, the side I'm on is really not important, and I think I'll get the best and most unbiased advice if you consider it from both points of view. I'm truly stumped!  

This is taking place in Washington, DC which is a very powerful seller's market at present.

A buyer who holds a contract to purchase an off-market property has allowed the contract to expire while the property was undergoing a court procedure to clear title.

Informed early on that the contract had expired, the buyer declined to renew or extend the contract, but did direct the title company to retain the escrow payment ($5000). The escrow remained in the possession of the title company throughout the period of the court procedure, which has just ended, with the title now clear and ready to close.

The seller now claims there is no obligation to honor the expired contract despite the retention of escrow funds by the title company. The seller has received none of the escrow funds.

The seller at first asked the buyer to put in a new contract at a higher price.

The buyer insists that the original contract and contract price must be honored because the escrow payment has remained in place.

I’ll add something that may not be strictly relevant but it has poisoned the well from the perspective of the seller. Before the court case was completed the buyer or an associate went in and removed plywood from the entrance of the property and replaced it with a flimsy door, without the knowledge or permission of the seller. The seller took a picture of the door and called a locksmith to reinforce it, but locksmith didn’t get there before the door was broken and the property was entered illegally. A city official passing by the property determined it had become a public danger because of the break-in and ordered the city to replace the plywood within 24 hours, without notice to the owner. The city also slapped a fine on the seller.

The buyer denies knowledge or responsibility for the action on the property and the fine. 

The seller is furious and frustrated. The seller now asks if the seller may ignore the original contract from this buyer, and list the property.

Seller’s attorney cautions that if the seller tries to sell the property to another buyer, the seller runs the risk of a lawsuit, which, regardless of the merit, would be time consuming and costly to the seller. Attorney counsels against that risk and believes the seller should try to negotiate a higher price from the original buyer but settle at even if the buyer does not produce a new contract or a higher price.

The title company sides with the buyer and suggests that properties are bought and sold all the time with expired contracts, and the absence of an extension addendum does not matter because the escrow is still in pocket.

As a realtor I was trained to be hyperaware of the status of the contract and never to let it expire unless the buyer wants to walk. But we all know n real life people do all kinds of things, including close with an expired contract. I have also asked for my broker's guidance.

What's your best judgment? Consider answering the following questions:

a. Does the buyer retain the right to complete the purchase in spite of the expired contract because the escrow is in place? The buyer's counsel has advised that the the contract must be honored.

b. Can the seller list the property and disregard the expired contract? Or must the seller honor the expired contract?

Also, is there an alternative course of action to resolve this dispute? I'm missing it if there is.

Thanks for your time and thought, 

Nancy E. Roth

@Marci Stein @Joel Kleyer It turns out it is a little too good to be true. As usual you have to read the fine print at the bottom of the page. 

Be aware that Visio has varying financing criteria for properties in different locations. They do state this at the very bottom of their website page on their loan programs. http://www.visiolending.com/loan-programs You just have to scroll all the way past the paragraphs on loan programs that are not necessarily relevant to your needs. 

I didn't look past the refi program I was interested in pursuing, so just called, only to learn that my three cash-flowing duplexes do NOT qualify for Visio's criteria for no other reason than that they are in Baltimore City, Maryland. The minimum property value for any property in Baltimore, Washington, DC, and Philadelphia is $100K, not the more prominently advertised $75K. In fact, it's $125K for SFRs in Cook and Cuyahoga Counties. My properties, acquired for $80-90K each, are not going to get a refi from Visio. 

Good luck to you, and let the community know what you wind up doing for your refi.

@Marci Stein @Joel Kleyer It turns out it is a little too good to be true. As usual you have to read the fine print at the bottom of the page. 

Be aware that Visio has varying financing criteria for properties in different locations. They do state this at the very bottom of their website page on their loan programs. http://www.visiolending.com/loan-programs You just have to read it all the way through.

I just learned that my three cash-flowing duplexes do NOT qualify for Visio's criteria because they are in Baltimore City, Maryland. The minimum property value for any property in Baltimore, Washington, DC, and Philadelphia is $100K. It's $125K for SFRs in Cook and Cuyahoga Counties. Otherwise they would meet the more prominently advertised minimum value of $75K per property. 

Not complaining, just telling you my new understanding, having just finished a phone call with them. 

Good luck to you, and let the community know what you find. 

@Joe Ort Thanks for posting. I hadn't heard about Airtable and just looked it up after seeing your post. I'd be interested to hear more about how you use it. Did you create your own template or use one of theirs (maybe digital asset management)? 

I'm very fond of Excel, like @John Warren, but only for certain things, like evaluation of acquisitions, calculating cost and benefits of different loan structures, and projecting cashflow. But as I've accumulated more experience and assets, my situation has just become too complex for one spreadsheet. I have held three rentals over the long term that I manage myself. I just acquired 3 occupied duplexes, a total of six units under a new LLC and a new loan, which are all managed by a local firm. Plus I have two rental units that I have sold and retain the paper.

So for the managed ones I don't want to duplicate what my property manager does, getting into the weeds of the repairs, but I do need to track his monthly expense reports for each unit. On the three I self-manage I DO need to get into the weeds of the repairs. On the notes I hold, I need to make sure the cash comes in and the property tax and insurance are paid. This is why Buildium or the other property management systems are not a good fit for me. Also I don't want to have to keep up with several spreadsheets and files, it's become way too time consuming. 

So I hold out the hope that I can put all this tracking and data together in one data tracking system! Am I dreaming? Do you think Airtable or any other software would fit the bill? 

$5,000 is what I paid when the lender cancelled at the last minute and I couldn't close, plus doubled my escrow. Scrambled, wound up with three loan proposals, took the best and closed 2 weeks later. If you try to purchase with the same lender again, protect yourself by negotiating a long closing date. Or at least insert a clause in the contract giving you the right to postpone closing for two weeks if lender takes longer than expected. 

What you have here is your tuition in the school of hard knocks.