Preventing furhter Leins/Judgements

[Joe Lee 0]

How do I prevent the seller from having more leins/judgements put on the property?

 

I'd hate to not have a T/B in the house and about to cash out next thing you know they got a new 20k hospital lein on the title

 

-Joe

[b3531 0]

Hi Joe,

I would record a "Memorandum and affidavit of agreement. This would put a "cloud" on the title.

 

or

 

You can use a Performance Mortgage. This document is signed by both the seller and the buyer in a lease option agreement, notarized and perhaps witnessed, if your state requires it. Then it gets recorded and creates a lein on the property.

This document is solid because it is an actual lein and not just a cloud.

 

The Memorandum is only signed by you and usually does the trick.

 

Bill

[MichaelC 160]

Hi, Joe. Ditto what Bill said. However, depending upon local and perhaps State law, you may very well be required to have the homeowner's signature on a Memorandum of Option prior to recording it with the County. Check first.

That said, if the homeowner's signature is required, there should be no reason why an honest owner should object to doing so.

[Joe Lee 0]

So having the sellers signature on the memorandum and recording it will stop further leins from attaching to the property??

 

Joe-

[MichaelC 160]

So having the sellers signature on the memorandum and recording it will stop further leins from attaching to the property??

 

Joe-

No. A Memo of Option will not prevent someone from placing a lien on a property. The Memo serves to cloud the title by letting everyone know that you have some sort of interest in the property, and must be dealt with if, say, an attempted sale of this property is taking place, or a refinance is tried.

You can't stop someone from placing a lien or judgement against a property. If I successfully sued a homeowner and received a judgement for $20K, I would sure go ahead and place a lien on the property if I was able to do so. Your interest in that deal would be totally irrelevant to me.

Now, you're agreement with the homeowner states that they must convey a marketable title to you.

That lien is the responsibility of the homeowner, not you.

[-Tony- 0]

Correct me if I am wrong, but with the performance mortgage, if the owner were to have some liens on the property and said he would not pay them. if this were to void your deal when the t/b went to finance, could you still leave the performance mortgage in place to re-coupe your loses?

 

Tony

[Joe Lee 0]

Ok, then what happens if the lein makes the property upside down? I know I would have to give the T/B their option money back for me not being able to deliver the house, is there anyway I can come out ahead??

 

Another thing, lets say I just assigned the L/O to the T/B only for an assignment fee, what if the seller say 6 months after I assigned the L/O and I'm gone, and a huge lein attached to the property making the title unmarketable, can the T/B come after me to get back that assignment fee since they cant get the house when they try to close? and if they try, will they win in court?

 

Joe-

[MichaelC 160]

Tony, legitimate concern with the Performance Mortgage. But, I'm not an attorney, and I think one is needed to answer that question. Is there an attorney in the house? Actually, I have been trying to recruit one to moderate a legal forum here, but I've no luck yet. If someone knows of one........

Joe, same thing. I don't think there is any one correct answer to your question. The specifics of the deal would need to be pored over by the attorneys involved to bring it to some kind of satisfactory conclusion.

As for the Assignment question, again, the specifics involved will determine the answer. My opinion is, no, your assignment fee is not going to be given back in the scenario you describe assuming the language in your agreements is correct.

Let me say one thing here. You can drive yourself crazy worrying about all the things that may, could, possibly, and might go wrong. But, why?? I would rather do my deals, earn $15K profit on four deals, then run into a problem and have to give back $4K as a result. I'm still ahead financially, and a hell of a lot wiser for the experience.

Stop fretting about all the negative possiblilites and look ahead with a positive point of view! All the possible problems you are describing have never occured to me personally. Be careful, be smart, do your due diligence, be honest, and operate behind the shield of an LLC or a corporation. You'll be fine.

[Joe Lee 0]

This isnt so much the worry about what would happen, just an intense facination on how things work. I like to pick apart the theory and play with it

 

I'm going to do this business either way things go, but if something along the way pops across my radar, I'd like to have an answer to that situation.

 

I am relieved though that you have never came across these supposed delimas I pose here.

 

Thanx-

[MichaelC 160]

Understood, Joe. I just don't want your "fascination with how things work" to lead you down the slippery slope of Paralysis of Analysis.

[Joe Lee 0]

Soo....

 

Is there a way to prevent further leins/judgements from attaching to the property?

 

-Joe

[NickC 0]

Hello all.

 

To my knowledge the previous posts explained the best ways to protect your interests in a deal regarding additional liens on the property. As long as the seller is still on title, they still have the ability to ad liens. In your contract however, it should state the seller will deliver a clean title...and it is in the seller's best interest to do so.

 

Now, recording a Memo or P.M. will make it very difficult for the seller to try to sell to someone else. Would you purchase a home with a cloud or lien on title? This would make financing very difficult for a home buyer. It is in the seller's best interest to proceed with the deal, and deliver title as required.

 

It's all about MINIMIZING your risks. There are risks in every deal you do, and protecting yourself this way helps to minimize them.

 

Thanks.

Nick

[MichaelC 160]

It's all about MINIMIZING your risks. There are risks in every deal you do, and protecting yourself this way helps to minimize them.

Exactly.

[Joe Lee 0]

I only bring this up because I have heard from a few investors that some title company's close over the cloud cause the title co thinks that it is a opinionated cloud, and they conveniently "miss it".

 

Also, if the seller gets a lein that makes the title unmarketable then *I* have to give back the T/B their option money cause I cant deliver my end of the bargin.

 

Just seeing if there was a way that's all...

 

Thanx-

[mark 0]

If the title company "missed" the recorded option,there at falt and hopefully the new buyer had title insurance. They could sue the title company. and because of the recorded option even if the house is sold the new owner is obligated to sell it to you, for your pre determined price. No different then buying a building with a tenant with a lease, you as the new owner are stuck with the terms of the lease.