All Forum Posts by: Traci Lovelace

I apologize for the length, I'm trying to cover it all.

We purchased a HUD home and learned right after closing that part of the property was a separate parcel that did not convey. There was no survey - lesson learned. The additional lot was in foreclosure due back real estate taxes, and there were liens on it. I located one of the two former owners and found that her husband died. My title agent had her sign a quit claim deed. I paid the back taxes and attorney fees and I gave her $500 for her trouble. The liens were not recorded properly and we dodged them. There was some weirdness with the two preceding deeds on that lot and my title agent was supposed to clear it up. She never did and we never got title insurance on it. I mistakenly thought it was taken care of and a title insurance policy I received on a different unimproved lot was for this one.

Fast forward, we renovate and sell the house.  The title underwriter for the buyer points out far more clearly than my title agent ever did what exactly was wrong with the title on the lot.  The icing on the cake was that my title agent had put the wrong lot number on the quit claim deed.  Unbelievable.  Long story short, the dead owner's 2 sons and his ex wife have to sign off on a deed of correction and the widow has to sign that and a list of heirs.

The title agent who was supposed to have fixed it was contacted and after a month of dragging her feet, I fired her.  The buyer's title agent agreed to represent both sides.  I did all the legwork of locating all the parties, getting a copy of the death certificate, everything that I could to bring this to a conclusion.  Then the title person who was taking care of the file left the company.  A new person was assigned.  I met with them and went over everything for the third time.

Paperwork has been Fedexed to all parties.

The widow has already asked me for more money.  I told her I didn't have any more to give.  One of the sons reached out to me and wants me to call him, presumably because he wants money also.  I told him if he had questions it was best for him to call the attorney's office, as I was not a lawyer.  This was mostly to buy some time and figure out what my options are.

I am between a rock and a hard space.  Our buyers have already moved into the house and are renting it until we can work this out.

 I don't want to keep paying out money on this, I feel like I'm being extorted.  What can I do?  The property is a non buildable lot of no real value.  But the driveway for the property is on it.    I am an honest person and I don't want to outright lie to anyone. 

What is the cheapest way to get this resolved?

Oh and by the way this is our first investment property.  

We went to our real estate attorney (who we go to when things get too complicated) and he pointed out a paragraph in the contract that gives the seller the opportunity to reduce the purchase price to the appraised value, or the buyer the right to walk away.  But it's just as you say, @Andrew Johnson, we would lose what we already have in it.  I hope we can work it out to everyone's satisfaction.  It is an interesting project for many reasons. 

The only contingency was financing. We only put down an EMD of $1000, but the commercial appraisal, surveys and inspection fees have us all in at about $5k at this point.

Thank you for your input.  Yes, the cash outlay for us at closing changes substantially due to this issue.  They will fund 75% of the loan, and only 75% of the current value up front.  So our cash to close goes from $35, to $50k.

Additionally, when they shared the initial balance sheet with us, they did not make clear that the flood insurance premium they paid was only for a small mortgage balance.  We, of course, have to insure the building for the balance of the loan, which is several thousand dollars more per year in premium than we initially thought we were paying.

One other piece of information - without the tax credits this deal is a dud.  The appraiser said it was economically unfeasible or at best marginally feasible in their report.  They did not take the tax credits into consideration.  The bank is making the loan to us based on our net worth, not based on this piece of property.  It's a labor of love to fix up these older buildings in historic districts.  We do it to raise the overall neighborhood values and make a little cash, but mostly we raise the value of our own home, which is on the same block as this building.

Thanks again for your wise advice.

We are under contract on a building that is 3 apartments and a storefront.  It will require pretty significant repairs including foundation and slate roof.  Because of all the particulars, it qualifies for both federal and state tax credits for historic restorations for the cost of the work that is needed.  We would get 45% of the costs back.  Sweet.

We went to our local small town bank for financing, and they approved the loan.

BUT - We got the appraisal back yesterday and the pre rehab value of the property per the appraisal is   $22,000 LESS than what we agreed to pay for the property.  Because the post rehab value numbers work out to support the loan, the bank is letting us go forward.

Question - Do we have any right/opportunity to go back to the seller and ask them to reduce the selling price to meet the current appraised value of the building?  We surely don't want to pay more for it than we have to.

Appreciate any good advice .

Good morning Patti - my information comes from our civic league and local police officers.  

Thank you for the correction.  It's disturbing then that some of our local property owners care so little about the impact to the neighborhood that they make the choices they have made.

This may not be a popular opinion but I would tell you to avoid it.  I live in a transitional neighborhood that contains some section 8 properties.   Many of these properties have been a tremendous drain on the neighborhood and our local police department.  This is not to say that ALL Section 8 residents will be trouble but just a reminder that your leasing to the government, not the tenant.  And the government can not discriminate as to who they install in your property.  Yes, your checks will come on time but you have absolutely no control over the behavior of the tenants like you would if you were leasing directly.  Please be kind in your responses.  This is first hand experience.  

Good morning, My husband and I purchased two foreclosures, then created an LLC and transferred title to the LLC. (We were not initially all in the game) The title insurance policies are issued to us as individuals and not the legal entity we created. The LLC is wholly owned by one of us. Do we need to change the title insurance? TIA

I bet you already know the answer :)

I ended up telling them to leave. I paid them what they originally quoted, not the additional charges they requested.  It took me a week to clean the house afterwards.  There was sheet rock dust and mud on literally everything in the house.  My tools, all the power cords, the floors, unbelievable.  And I'm still sanding.  I lost so much time on this.  And it will never go that way again.  I will listen to the red flags.

About an hour after they left, I got a call from one of those check cashing places.  They were going to give up a big chunk of that check in order to get it cashed there.  I declined to provide the information they requested, and told them to take the check to my bank. I did not hear from them again.