Lis Pendens from nowhere

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Lis Pendens from nowhere

Lubasha White
Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes

Please anyone with experience of buying foreclosures could you help with advice in this situation?

I bought SFH in March at foreclosure auction and got certificate of title on this property. Several days ago I started to receive offers from attorneys to defend it from foreclosure. Checked in public records and indeed, found that in April someone filed Lis Pendens against of my property. From further research I figured out this record refers to mortgage done in 1993 by lender different from one that foreclosed on this house. However, that lender is not in the picture of threatening me to foreclose on my property but successor (?) who just bought the paper from him.

My question is: does second mortgage wiped out by first in foreclosure auction sale, or it has ground in court for whatever reason?

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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@Lubasha WhiteTalk to an attorney/title co.  You need to first determine if the new lender foreclosing is junior to the one where you bought the property.  If so you're pretty good.  Secondly, see if this other lender was named/served as defendant in the original foreclosure.  If so, done deal and the current foreclosing lender will have to dismiss.  They may not know they were foreclosed out, if they bought the note without doing good homework.  If this lender is junior, but was Not named as a defendant, not the end of the world.  An attorney can reopen the foreclosure and haven them foreclosed out without having to start the whole process over.

BUT.....since you say the currently foreclosing lender is from a 1993 mortgage, I'm guessing it is Not a second mortgage, not as to recording timelines anyway.  But maybe there was a subordination done at the time the mortgage which was foreclosed on, was originated.  Check the mortgage document online which caused the foreclosure auction you bought from, looking for a subordination from the lender now foreclosing.

@Lew Payne I'd be surprised if that holds up here, without a mortgage, since a Note gives you no security in the real estate, or the right to foreclose.  Getting a judgment would create a lien, but prior to that, I don't think so.

@Jay Hinrichs Judicial proceedings only here, no Notice Of Default option, that I know of.  LP with the accompanying complaint to foreclose (law suit).

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  • Lew Payne
    Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes
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    Interesting post.  Interesting because I'm on the other side of your coin.  I recently had my attorney shore-up my promissory note (I loan to select flippers) such that I'm able to attach a lis pendens on the property in question, immediately.

    One of the things I learned is that it'll be a hit-or-miss proposition (but it is still worth it to me)... it's fairly easy to get a lis pendens dismissed in court, if it doesn't follow the strict FL rules regarding its relationship to the asset (real property) in question.

    You'll have to get an attorney to challenge the lis pendens, but this should not cost you much... unless it turns out to have a basis in fact, in which case the lender will have to show proof of imminent filing of an action sounding in tort.

    In my case, I use the possibility of a lis pendens (in my promissory note - in the event of default) to secure my interest in the property should it require me to litigate the note or institute a collection action.  I want to be able to tie up the asset until I have my day in court.  However, once a lis pendens is filed against a property, you (the person filing it) had better come up with a civil suit that goes with it, or be prepared to be ridiculed by the court, if not fined for abuse of process.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    @Lew Payne  correct  indiscriminate filing of a lis pendens is a sure way to get sanctioned and worse. 

    why do you do this if you have a note and mortgage in FLA a simple notice of default will protect your interest.. why would you file the Lis pendens seems like over kill but.. I have not had to foreclose on the 400 or so notes I have in FLA... so knock on wood  LOL

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  • Lew Payne
    Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes
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    Originally posted by @Jay Hinrichs:

    @Lew Payne  correct  indiscriminate filing of a lis pendens is a sure way to get sanctioned and worse. 

    why do you do this if you have a note and mortgage in FLA a simple notice of default will protect your interest.. why would you file the Lis pendens seems like over kill but.. I have not had to foreclose on the 400 or so notes I have in FLA... so knock on wood  LOL

    Therein lies the rub... I did not state I have a mortgage on these.  On properties which have already been acquired (through financing outside of me), I loan on the repair costs based on a personal (unsecured) note.  It is these personal notes that have a lis pendens clause, and specifically mention that the funds are being used against said property, so that I can file a lis pendens (and have a good chance of having it stick) if necessary.

    The wording of that particular section of my unsecured note:

    "SECTION 6. Security.

    The Borrower hereby represents and acknowledges that the Lender is making the loan evidenced by this Promissory Note (With Balloon Payment) for the purposes of Borrower creating or obtaining an interest in certain real property in Marco Island, Collier county, in the State of Florida commonly described as 840 Partridge Court. Borrower further represents that the loan funds will be used solely for the purchase, refurbish, rehabilitation, remodel, service of, and to otherwise maintain such real property, and for no other purpose. Borrower agrees that the Lender is making this loan for purposes of creating such real property interest and that in the event of default the Lender may take immediate action to protect its interest in such real property, including the recording of a lien against such real property, filing an action to enforce the lien of this Promissory Note or any other recorded lien, and record a lis pendens against such real property in accordance with Florida Statutes 48.23."

    I generally avoid unsecured loans, except when working with partners (flippers) whom I've come to trust, where the ARV of the property is such that it can absorb litigation costs and still produce a profit.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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    @Lubasha WhiteTalk to an attorney/title co.  You need to first determine if the new lender foreclosing is junior to the one where you bought the property.  If so you're pretty good.  Secondly, see if this other lender was named/served as defendant in the original foreclosure.  If so, done deal and the current foreclosing lender will have to dismiss.  They may not know they were foreclosed out, if they bought the note without doing good homework.  If this lender is junior, but was Not named as a defendant, not the end of the world.  An attorney can reopen the foreclosure and haven them foreclosed out without having to start the whole process over.

    BUT.....since you say the currently foreclosing lender is from a 1993 mortgage, I'm guessing it is Not a second mortgage, not as to recording timelines anyway.  But maybe there was a subordination done at the time the mortgage which was foreclosed on, was originated.  Check the mortgage document online which caused the foreclosure auction you bought from, looking for a subordination from the lender now foreclosing.

    @Lew Payne I'd be surprised if that holds up here, without a mortgage, since a Note gives you no security in the real estate, or the right to foreclose.  Getting a judgment would create a lien, but prior to that, I don't think so.

    @Jay Hinrichs Judicial proceedings only here, no Notice Of Default option, that I know of.  LP with the accompanying complaint to foreclose (law suit).

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  • Dana WhickerPro Member
    Investor · Fernandina Beach, FL · Member since 2014 · 557 posts · 374 votes
    11y

    @Lubasha White Are you sure you bought from the 1st lienholder?  If so, my guess is that the person filing the Lis Pendens is an inexperienced note investor who bought a second and doesn't realize they have wasted their time and money.

    Interesting, Keep us posted please.

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  • Account Closed
    Homeowner · Signal Hill, CA · Member since 2015 · 521 posts · 70 votes
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    Wasn't a title insurance policy purchased for this foreclosure auction winning and if so, wonder how did they not catch the 93 mort (2nd?) lienholder against the property and address it regardless of who the successor company might be now.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    @Lew Payne  would you not be better served with  a UCC filing... If your suing on your note you have created a lis pendens as in you have brought suit to satisfy a non paid unsecured note. And once you get a judgement you record in the county and it attaches to the property... I am not familar with FLA unsecured Prom note laws.. I know in Oregon loans under 50k are subject to a low interest rate ( anti loan sharking rules)

    Do you run into usury issues with unsecured notes ? 

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  • Lew Payne
    Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes
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    Originally posted by @Wayne Brooks:

    @Lew Payne I'd be surprised if that holds up here, without a mortgage, since a Note gives you no security in the real estate, or the right to foreclose.  Getting a judgment would create a lien, but prior to that, I don't think so.

    Thank you for your opinion, Wayne.  I never said the note gave me the right to foreclose - so you're basically disclaiming something that was never stated.  The note does, however, give me a security right in the real estate - in an indirect manner, and the right to tie it up while litigating a claim against the entity that owns it, which I will not go into here.  If you disagree with my attorney, who has ensured that my claim would meet the provisions of § 48.23, I would love for you to speak with him about this.

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  • Lew Payne
    Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes
    11y
    Originally posted by @Jay Hinrichs:

    @Lew Payne  would you not be better served with  a UCC filing... If your suing on your note you have created a lis pendens as in you have brought suit to satisfy a non paid unsecured note. And once you get a judgement you record in the county and it attaches to the property... I am not familar with FLA unsecured Prom note laws.. I know in Oregon loans under 50k are subject to a low interest rate ( anti loan sharking rules)

    Do you run into usury issues with unsecured notes ? 

    Exactly, Jay... you've hit upon the inner mechanism by which these particular notes are secured, if necessary.  The lis pendens can be filed as soon as a note goes into default, thereby making the asset non-liquid and calling into question the priority of subsequent liens.  Meanwhile, various ways exist of enforcing the note, including a UCC filing.

    The provisions of business to business loans differ from consumer loans, and in addition, where necessary, the provisions of member capital contributions differ from ordinary loan terms.  Thus, there are various ways to avoid making usury loans.  Lima One Capital is sort of setting the standard for what can be done in FL, anyway... as a direct lender.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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    @Lew Payne  48.23, paragraph (3) seems to state that the action must be based upon a recorded instrument, as in a mortgage I would think.  I also believe a UCC filing is only applicable to equipment/personal property (even though it may be attached to Real property, like a water filtration system), not Real property.  You may be correct, but if you're originating these loans, why not just record a mortgage?  Filing fees are like $50 plus 0.35% of loan amount. 

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  • Brandon M.
    Agent / Investor · Clearwater, FL · Member since 2014 · 573 posts · 281 votes
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    @Lubasha White- you definitely want to speak with a Florida real estate attorney who can assist you. I have one I always use for all of my real estate related issues, she is based in West Palm Beach but can assist with anything anywhere in Florida. If you want her information send me a PM and I will give you her info.

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  • Lubasha White
    OP
    Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes
    11y

    I see from public records that former owner originated first mortgage in 1977 with bank that does not appear in further records. There is no actual document available to that mortgage either. Property was foreclosed in March 2015 with value of the claim 107k (rounded) by Branch Banking and Trust Company. This bank is a successor of Bank Atlantic that gave the loan for 141k in 2007. In between 1977 and current time there is a number of mortgages recorded from different banks along with satisfactions, subordinations and financial statements.

    Debt collector Bayview Loan Servicing LLC that filed LP against former owner and me in April refers to mortgage for 40k originated in 1993 by First United National Bank of FL and collector claims 24k.

    I got in touch with attorney, and ordered commitment of title to understand better where I am right now. What I see, this debt collector did not serve me with any documentation of their claim, and I found about it from 3rd party. To identify if their claim is junior I should see when they bought this note but there is no evidence of this transaction in public record, or I just did not find it. That’s why I am waiting for that title search result and hoping that debt collector has no case till they served me with their claim content.

    So what would be your thoughts guys at this point of perspective? By next Monday 20 days after they filed LP will expire and what I may expect next?

    Thank you so much for all input you have done at this time, it is priceless and helps to see the picture in whole much better then I saw before.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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    @Lubasha White It doesn't matter when Bayview bought the note, but when it was originated.  So, did you get named, and served, as the new owner?  Sometimes there is a lag in recording on the property appraiser site.

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  • Lew Payne
    Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes
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    Originally posted by @Wayne Brooks:

    @Lew Payne  48.23, paragraph (3) seems to state that the action must be based upon a recorded instrument, as in a mortgage I would think.  I also believe a UCC filing is only applicable to equipment/personal property (even though it may be attached to Real property, like a water filtration system), not Real property.  You may be correct, but if you're originating these loans, why not just record a mortgage?  Filing fees are like $50 plus 0.35% of loan amount. 

    Thank you, Wayne.  Out of courtesy to Lubasha White, feel free to contact me privately if you want to understand why I do not record a mortgage on certain loans - since that is not the original topic he wants help with.

    Meanwhile, to help Lubasha White, the following might prove helpful:

    http://www.floridarealestatelawyersblog.com/2013/0...

    Again, an attorney will be able to easily knock off the lis pendens - first with a letter to the entity that sets the record straight, and later with an action that includes sanctions if he is forced to file.

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  • Lubasha White
    OP
    Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes
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    Thanks a lot for all the tips and link, Lew. From that link I understood that Bayview might do nothing since they filed their claim and just wait until I sell the property to force me pay it off. Do you think they would be interested to contact me and discuss the matter? Or should I even bother but handle the case to attorney?

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  • Patrick L.
    Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
    11y

    The first step would definitely be to contact a real estate attorney.  The last thing you want is to not respond and get defaulted.   Did you do a title search before you bought the property at foreclosure sale?   Are you sure you bought the 1st position mortgage and not a junior?   If there isn't a satisfaction recorded from the original note then it would be senior to the 2007 mortgage.  Can you follow the chain of mortgages, assignments and satisfactions and see what was paid and what wasn't?   Even if the chain of assignments is confusing the satisfaction will reference the original volume and page for the note that is being satisfied.   Is this in Pinellas?

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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    @Lubasha White

     If Bayview filed the LP, they didn't "just file an LP.  They filed a foreclosure suit against the property, and if you don't defend it, it will be auctioned off.  Again, did they Name you, serve you?

    2Reply
  • Patrick L.
    Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
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    If you want to PM me the address I'll give you a quick non-attorney opinion on what the public records/court dockets say.  

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  • Lubasha White
    OP
    Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes
    11y

    Wayne,

    I just spoke with attorney #3 and he is talking exactly about this scenario, after 20 days of filing LP with doing nothing from my side I am in default and the debt holder escalates the case to foreclosure. I did not receive anything from them yet but I think they could attempt to contact me. I think there were notice from mail office that I have something to receive from them but I missed it  because I thought it related to different matter and did not realize it is important. So I could have it but missed it.

    What would be your thought I have to do to avoid default from here? I have only 2 days left, tomorrow and Friday, I guess. Also last week I actually sent certified request to Bayview to provide me with information about LP they filed, reporting that I have none. I called them today to find answer but they said they may respond within 30 days. Does it mean they cannot file default until I got information requested?

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  • Lubasha White
    OP
    Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes
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    Patrick,

    I sent you PM but did not include info that matter and will wait to hear from you to fix that ops.

    Thank you everyone who is trying to help me, you are the life savers.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    11y
    Originally posted by @Wayne Brooks:

    @Lubasha WhiteTalk to an attorney/title co.  You need to first determine if the new lender foreclosing is junior to the one where you bought the property.  If so you're pretty good.  Secondly, see if this other lender was named/served as defendant in the original foreclosure.  If so, done deal and the current foreclosing lender will have to dismiss.  They may not know they were foreclosed out, if they bought the note without doing good homework.  If this lender is junior, but was Not named as a defendant, not the end of the world.  An attorney can reopen the foreclosure and haven them foreclosed out without having to start the whole process over.

    BUT.....since you say the currently foreclosing lender is from a 1993 mortgage, I'm guessing it is Not a second mortgage, not as to recording timelines anyway.  But maybe there was a subordination done at the time the mortgage which was foreclosed on, was originated.  Check the mortgage document online which caused the foreclosure auction you bought from, looking for a subordination from the lender now foreclosing.

    @Lew Payne I'd be surprised if that holds up here, without a mortgage, since a Note gives you no security in the real estate, or the right to foreclose.  Getting a judgment would create a lien, but prior to that, I don't think so.

    @Jay Hinrichs Judicial proceedings only here, no Notice Of Default option, that I know of.  LP with the accompanying complaint to foreclose (law suit).

    Wayne: Any statute of limitations in FL for lenders who have done no collection attempts on a note for years?

    1Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    @Account Closed knows.  There is a statute/principle of "plevins" (spelling?)?  As for the case at hand, it should be fairly simple to track the mortgages subsequent to the one now foreclosing, to see if there were any subordination agreements for this mortgage, contained in the subsequent mortgages, or even a satisfaction.  Bayview is an established Servicer of course, and I'm guessing they know what they're doing. Patrick will probably figure it out with the property info.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
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    Lubasha:  Don't get confused by calling Bayview Servicing a debt collector.  They are either foreclosing on a note they own or they are foreclosing on note as the servicer on behalf of the lender.  All lenders are considered debt collectors when the loan is in default.  They all must identify themselves as debt collectors in all communications.  Even so they are the note or lien holder, not a collector.

    It sounds like you may have bought a property subject to an old senior lien that was either never paid off, or if it was, it was not properly released.  If the lien is legit and outstanding, is it worth it to pay it off?

    2Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    11y
    Originally posted by @Wayne Brooks:

    @Account Closed As far as I know, in Florida, the 5 year statute of limitations only applies if there is No foreclosure filed within 5 years from the date the loan is legally Accelerated, called due.  If not Accelerated when it goes into default, I don't know.  Maybe @Dion DePaoli knows.  There is a statute/principle of "plevins" (spelling?)?  As for the case at hand, it should be fairly simple to track the mortgages subsequent to the one now foreclosing, to see if there were any subordination agreements for this mortgage, contained in the subsequent mortgages, or even a satisfaction.  Bayview is an established Servicer of course, and I'm guessing they know what they're doing. Patrick will probably figure it out with the property info.

    I have this curiosity if there are situations where lenders give up collect-ability of old notes and recovering the collateral.  In CA the deed of trust lives forever.  Or 60 years I think it is now.  So there is a SOL on a note collection, but the deed of trust doesn't go away.  This has always confused me.

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  • Lubasha White
    OP
    Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes
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    K. Marie Poe

    Original holder of the mortgage 1993 is FIRST UNION NATL BANK. It is not named in Judgment with Branch Banking that foreclosed on property in March 2015. Instead it says that defendants are former owners and individual defendants… weather said unknown parties may claim an interest as spouse, heirs, devisees, grantees, or other claimants…

    Attorney #3 suggested that mortgage 1993 was sold to Bayview after the property was foreclosed in March 2015 and I bought it.

    As I mentioned before, mortgage 1993 was for 40k and Bayview claims 24k. In order to keep the property, which is a must for me, I would rather take a lesser loss and pay this note, then get wiped out from this project. I simply would not be able to recover from loss of the whole property, it’s like matter of life and death for me.

    Attorney #3 states that Bayview might be not interested to accept my payoff their note and still proceed to foreclose on me against of my will, since I am not former owner but 3rd party. Could you confirm or object it please?

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