jaydub 0 Report post Posted December 29, 2004 Hello everybody,I posted this over in legal as well, 'cause I wasn't sure where it fit. I need some advice. I have a landlord/seller who has asked me if he could refinance to get money to expand his business, I know it's not a good idea to do but he is only refinancing $20k over what he owes on his mortgage and that comes no where near the sales price we agreed upon so it really doesn't effect our agreement. His lender just called me and asked me to sign a subordinate agreement placing me in 2nd lien position behind their 1st and asked me what I needed from them to do that. I don't know. What do I do and how do I proceed and protect myself at the same time? This is moving faster than I was prepared for so any help would be greatly appreciated.Thanks,JayDub Share this post Link to post Share on other sites
MichaelC 160 Report post Posted December 30, 2004 JayDub, at least you know you're dealing with an honest homeowner. He did, after all, take the time to ask before doing.Based on your description of the deal, the homeowner refinancing the property does not pose any threat to you and your position in this deal. As you said, the total encumbrance on the property "comes no where near the sales price we agreed upon so it really doesn't effect our agreement." This being so, it seems as if you're unaffected by this action. I assume you have a Memorandum recorded on this property?As for the lender requesting you to accept second position, this is perplexing. You already are in second position. A refinance for an amount less than your agreed to option to purchase price changes nothing in this regard. Share this post Link to post Share on other sites
jaydub 0 Report post Posted December 30, 2004 Michael, I agree, I thought I was already in 2nd position but my impression was that the person on the phone was an assistant and wasn't really sure what to ask me and hoped I knew. She asked me what I needed from them, as I mentioned I don''t really know. Do I just need her to send me the subordinate agreement I sign it and send it back or should I ask for the mortgage papers to review? I never did get an authorization to release info. on his mortgage due to lack of experience, this could be a good time to rectify that. Any advice?JayDub Share this post Link to post Share on other sites
MichaelC 160 Report post Posted December 30, 2004 If this woman is, in fact, an assistant, I suggest you ask to speak to someone with more experience. It seems to me that everyone involved is interested in doing the right thing, so I don't see this turning south on you. However, I find it strange that you are being asked to sign a subordinate agreement. This could be their standard operating procedure, though. Before signing anything, give it a very thorough reading, and if there is anything in it you are not sure of, you'd be wise to speak with a local attorney to protect your position.In the meantime, I'll ask you again: do you have a Memorandum of Option recorded against the property? And, yeah, an Authorization to Release Information regarding this mortgage is a good idea, too. Share this post Link to post Share on other sites
jaydub 0 Report post Posted December 31, 2004 Michael, yes I have a Memorandum of Option recorded. I used the one in your course.Thanks for your helpJayDub Share this post Link to post Share on other sites
MichaelC 160 Report post Posted December 31, 2004 JD, seems to me you are in a protected position. Just be careful with anything that you might sign, so as to not eliminate that protection from the deal. Share this post Link to post Share on other sites
JCannon 0 Report post Posted December 31, 2004 Regarding the Memorandum of Option, is it common practice or necessary to record one when doing a CA? Share this post Link to post Share on other sites
-Tony- 0 Report post Posted December 31, 2004 Regarding the Memorandum of Option, is it common practice or necessary to record one when doing a CA?<{POST_SNAPBACK}>there really isn't a reason to Share this post Link to post Share on other sites
MichaelC 160 Report post Posted December 31, 2004 JC, you only need to protect your position if you are in the deal for any length of time. A sandwich lease, for example. With a CA or any other type of assignment, you're not in the deal so a Memo isn't required. Share this post Link to post Share on other sites