House Sold Without Paying Off My Lien

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House Sold Without Paying Off My Lien

Jackie Lange
Investor · Central America, Panama · Member since 2010 · 423 posts · 293 votes

About 10 years ago, I sold a house with seller financing. I closed at a title company.  They recorded my deed of trust (mortgage). 

The buyer stopped paying me.  I discovered that she sold the house a few months ago but the title company in Dallas Texas completely overlooked my lien. They never called for a payoff.  The funds were given to the seller (my buyer).  

The title company says call the seller but she's not returning my calls or emails.   

The title company's error and omission insurance should kick in, but it will require a lawsuit to get them to pay.

Or, I could foreclosure on the house since no payments have been made for several months.  


Looks like I will have to file a lawsuit against the title company, lawsuit against the person I sold the house to, and file for foreclosure if I ever want to see my money.

Has anyone else ever had this happen?  

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Dion DePaoliPro Member
Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
8y

@Greg H. the OP can issue a Notice of Default right now.  The time to cure is 20 days.  No need to wait until December at all.  

Don't wait @Jackie Lange, just start moving on the FC. Forget making contact with title companies, agents and other 3rd parties. None of them will help you. (except your own counsel) The idea is simple, you were alienated - title to the real property was conveyed in whole and you were not paid off. Your instrument should carry a due on sale clause that gives you a right to call the whole loan due. The NOD is the first step. You will send the NOD to the subject property which should get the attention of the new homeowners. They will panic and start making calls to the title company, agents and alike. All you want is to be paid off in full. Avoid conversations with 3rd parties. For a brief moment you will be treated as the devil squashing the dream of these homeowners. It just is, what it is.

As the chips fall, you will get paid off.  The owner and lender policy will kick in and pay you off.  The insurance company will then pursue the borrower/seller civilly and investigate the title companies search to see why the lien was missed.  None of that matters to you.  Don't get wrapped up in the drama outside your door.  There will be much.  

It's not your fault.  It's not the new owner's fault.  And that is why we have title insurance.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    8y

    Well then, that's certainly an interesting twist!  Maybe the process server should book a date.

    0Reply
  • Mark Whitted
    Rental Property Investor · Rockwall, TX · Member since 2017 · 87 posts · 49 votes
    8y

    You need to stop trying to find her/him and just go after the title company. Let THEM deal with trying to get THEIR money back from this slimeball. THEY have been negligent. THEY have insurance to cover this. (Of course they probably won't have the insurance after this deal!)

    0Reply
  • Michaela G.
    Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    8y

    What about the new owner's mortgage company? Their lien is now in 2nd position and the title company represented the lender in that sale. 

    Subsequently, I would think if this was made known to the new mortgage company, they'd pull out all of the stops to make the title company pay you off, whether through their insurance or whatever means. They also have some big time attorneys on hand, that deal with things regularly. 

    I think they'd have the most to lose (as their loan would be higher than yours) and they'd move mountains to get into 1st position.

    1Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y
    Originally posted by @Jackie Lange:

    Mr OR Ms??

    Remember that house I sold with seller financing then the buyers asked me to switch to a Warranty Deed in just the “daughter” name so she could refinance.

    You didn't mention the deed, daughter or refinance in your initial post. This just got a lot more interesting even without the he/she thing.

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  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    8y

    @Jackie Lange    This might be of major benefit to you.  

    https://claimittexas.org/app/claim-search?lastName...

    For everyone else... if the Title company cannot get your money to you they will eventually send the payoff check to the state.

    0Reply
  • Michaela G.
    Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    8y

    @Michael Biggs. The title company no longer has the funds. They paid out to Jackies buyer.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Tom Gimer  if the new buyer got a loan from a bank.. the bank would have gotten a title policy show them in 2nd position and that bank would be demanding title to clear that lien.

    If it was a cash sale.. then I suppose the foreclosing on the home is the option then when the new owner gets the notice they make a demand on title to pay this off  ( if they got title insurance with out this lien as an exception)

    Kind of like the big builder in Cinncinati that sold 100 plus homes without ever clearing the construction loans.. title and bank ended up clearing the titles and the guy who did it went to jail.

    I know I have made what I thought were first loans according to my instructions only to get title policy showing me in second I made demand and title co. fixed it and got rid of the mortgage that was not suppose to be there.. in this case that would be pay off Jackie.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    @Jay Hinrichs Who knows what else OP signed when she agreed to a title change to allow daughter to refinance? Point is a refinance would pay Jackie off, require Jackie subordinate, or something. Perhaps they buried a release in that paperwork. 

    Had a file recently where a fairly large DoT on title was assigned and then released of record. Turns out the assignee was a related third party -- loan wasn't paid it was forgiven. Fraudulent assignment and release ... lawsuit ... good thing we got notice, on the day of closing!

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Tom Gimer Yup I have had fraudulent release's filed against my loans also.. pretty much anything illegal folks can think of they try to do to us HML ers LOL... this one the guy went to trial .. but judge let him off because he paid us.

    another borrower did this a bunch I caught him and title covered the forgeries which are a covered item.. that guy ended up in San Quentin... this is serious stuff.  its felony theft.

    but OH so easy to do.. and we you and I knowing more than most should probably not even talk about it on BP lest we give the Nigerian scammers more fodder

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  • John Nachtigall
    Santa Rosa, CA · Member since 2017 · 325 posts · 701 votes
    8y

    any update?

    0Reply
  • Tom S.
    Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    8y

    @Jackie Lange  Any update on this?

    0Reply
  • Dave Graham
    Kissimmee, FL · Member since 2012 · 1 post · 0 votes
    8y

    Be great to have an update on this very unique situation! 

    One thing I see is all the talk about the original title co messing up, of course talking to them won't be too much help since they are the source of the problem they won't want to reach in their pocket to make things right.  BUT the new title co insured the title was clear when the new buyer bought and the new buyer title is INSURED. Now here is a defect in their title. The new title co should pay out to clear the defect (mortgage that wasn't paid off) on the title.  There by putting the new mortgage back into 1st position and making their client (new buyer) whole.  Then they can go after the original title co for allowing such a shoddy deal (paying mortgage off outside title) then they both can go after the HeShe or whatever left with the $$$ in their pocket.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    @Dave Graham You missed the part where OP says she agreed to a title change to allow daughter to refinance. The mystery of the disappearing lien is I believe solved somewhere in that transaction. Title companies don't just ignore liens and when confronted say "you go figure it out."

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  • Maurice George
    Member since 2019 · 113 posts · 25 votes
    7y
    Originally posted by @Jackie Lange:

    Filing foreclosure is about $1500 and takes a few months.

    A lawsuit starts at $5,000 and goes up by the hour.    But the time if finally got settled, the attorney would likely get more money than I would.

    If I file foreclosure on the old owner, she will probably ignore it... she has nothing to lose.

    But filing foreclosure on the new owners will get them to take action contacting the title company and their Title Insurance company.  If they fail to take action, I get the house back.  Either way I win going this route.

     Jackie, so, your buyer is racking in $$$$ she does not deserve but off the hook?

    0Reply
  • Jackie Lange
    OP
    Investor · Central America, Panama · Member since 2010 · 423 posts · 293 votes
    6y
    Three years later, I finally got paid. 

    When the title company completely ignored my recorded deed of trust, I did not get paid off at closing on a property I had sold with seller financing.  The title company would not tell me who issued title insurance.  I hired two different lawyers to try to resolve the problem but they were more interested in dragging it out as long as possible so I would keep paying them. Finally I decided to just wait it out knowing that eventually the couple who bought the house would want to sell and they would have a title problem. A few months ago I was contacted by the title insurance company, we came to an agreement and I got paid last week.  
    3Reply
  • Alexandre Marques dos Santos
    Rental Property Investor · Member since 2020 · 215 posts · 137 votes
    6y

    thank you Jackie.  how did you had back to the title?  I though the Title company had cancelled the Lien, therefore you were out of the Title.   Congrats by the way...

    0Reply
  • Jackie Lange
    OP
    Investor · Central America, Panama · Member since 2010 · 423 posts · 293 votes
    6y
    My lien was still in first position.  The title company closing the transaction and title insurance company who issued title insurance screwed up big time.   Luckily, it finally worked out!
    1Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    6y
    0Reply
  • Albert Ng
    Rental Property Investor · San Jose, CA · Member since 2015 · 401 posts · 221 votes
    6y
    Originally posted by @Jackie Lange:
    Three years later, I finally got paid. 

    When the title company completely ignored my recorded deed of trust, I did not get paid off at closing on a property I had sold with seller financing.  The title company would not tell me who issued title insurance.  I hired two different lawyers to try to resolve the problem but they were more interested in dragging it out as long as possible so I would keep paying them. Finally I decided to just wait it out knowing that eventually the couple who bought the house would want to sell and they would have a title problem. A few months ago I was contacted by the title insurance company, we came to an agreement and I got paid last week.  

     Congratulation!

    The title company would not tell you probably because you weren't the insured party, and they have nothing to do with you.

    I'm a bit confuse, maybe you or someone knowledgeable can explain to me. You hold the first position lien. Why can't you just foreclose on the house in the first place?

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