All Forum Posts by: Tom Gimer

Yes, having the court impose a constructive trust on the assets is the remedy for a claim (under these circumstances) for unjust enrichment. 

What they want to do is have the property transferred into a trust (days, hours, minutes) prior to settlement. The declaration identifies the would-be buyer as trustee; and the current owner as the beneficiary of the trust. At settlement what is sold is the beneficial interest in the trust rather than the property itself.

On paper the lender just sees a common estate planning tactic rather than a sale of the property. But what is being proposed is nothing more than an effort to avoid implication of the due on sale clause. This may actually be the best method to prevent the sale from being discovered, but of course there are other potential pitfalls.

Under federal law a transfer to a trust where the grantor retains the beneficial interest WOULD be exempt from the DOS... but notice how in the context outlined above the exemption would disappear.

Got a good one for you, Jay... bank error resulted in two duplicate wires being sent to the same seller. Demand was made... promises, stalling and excuses ensued. A fool would see exactly where that was heading.

They managed to spend some of the "free money" but the account was quickly frozen and judgment entered for constructive trust in the full amount plus the cost of the bond, interest and attorneys fees. Bank released the entire amount upon presentation of the Order.

The purpose of the CPL is to expand coverage beyond the commitment/policy and beyond the title insurer itself to others involved in the process (title agents)... your scenario.

Quick search -- https://houston.fntic.com/getattachment/6efdc91c-3146-46bc-a...

I was saying start the analysis there as that would seem be the simplest route to recovery.

First things first... did you receive a closing protection letter?

IMO the best investor contracts are short and simple enough so as to not be intimidating to sellers, but comprehensive enough to include all the necessary buyer protections and local requirements.

@Michael Morrongiello Oh I know the agreements and the documents used in these transactions. My issue is that a bank/banker should not allow a POA to be used to benefit the agent. The important language in your reply is "on their behalf" -- redirecting the principal's funds is not acting on their behalf.

Seems to me the smartest/easiest way to deal with lender escrow accounts is to have that feature eliminated from the loan ASAP in the subto process... preferably immediately after an annual tax disbursement reduces the account balance to a low point.

But yes, when the principal dies so does the power.

Yes, an entity can be appointed as attorney-in-fact for an individual.

My concern about the above... an attorney-in-fact depositing the funds of the principal into their own account would be an obvious breach of fiduciary duty.

Was the full purchase price paid to the title company, or just the taxes?

If the latter, both buyer and title company may have just created major problems for themselves.