I have a buy and hold property in Indianapolis that I've just completed rehab on and I am in the process of refinancing. I'm doing the Brrrr strategy on this one and I found out months after I purchased the property that there are 2 nuisance charges against the property. Each for 5k, 10k total. This was a cash purchase and nothing ever came up during the title search from the title company as having any kind of lien against it, I'm wondering if the nuisance counts as the same kind of thing. On the notice I received from the city it listed the previous two owners that had been notified of a pending nuisance but my name wasn't on it. Now, I've totally rehabbed and coincidentally fixed all the outstanding issues that were cited and I've had my property manager contact they city and ask for a reinspection. I'm not sure how this process is going to play out exactly so I want to be ready for all scenarios.
Is the title company responsible for any of the charges if I have any?
Has anyone had experience with this sort of thing in Indy?
Any shared stories/experiences would be greatly appreciated. Thanks in advance!
Check your title commitment under the "B" exceptions. Some title co.s, including those for REO's, don't check for "unrecorded" liens, and exclude them from your policy.
Those come up most of the time during a title search.
The good news is that you should be able to reach out to the city and get those fines reduced by 80%-90% [ish].
They will come out and do another inspection confirming the work. You'll probably have to have a local representative attend the next hearing and tell them this as well - this is where you can ask for the discount.
You're PM should be able to do this for you.
I wouldn't think they would hold up a loan but I've never had that issue come up during a loan either.
The city should be able to inspect fairly quickly and get you some kind of written statement concerning them.
A lot of title companies in Indy will sneak in some hold harmless paperwork into there closings... If you don't mind me asking what title company did you use?
I used eagle land title, Mike Coop was the preparer. I spoke with him yesterday and he said nothing was on record at the time. His advice was to contact one of the managers at the code enforcement office 3173274600 and tell them the situation and they should remove the lien from both the recorders office and the tax office. He said code enforcement is very aware of this issue of not recording correctly.
I keep getting voicemail at code enforcement, hopefully someone calls back soon.
Eagle land is a good title company. Nothing but good experiences with them.
You should be able to get them removed or reduced like @Shawn Holsapple said...
Thanks @Ryan Mullin I'm just hoping I can get it done quickly! Still no answer at code enforcement. Appreciate the input.
Hi @Aaron Cullen ,
Refinancing is probably on hold until this is resolved UNLESS you switch it to a cash out refinance and pay off these items in full.
Others suggested ways of reducing the payoff by 80-90%. I'd suggest cancelling the refinance, and doing that.
You can re-start the refinance with the same lender, recycling the appraisals, once you're truly ready.
Thanks @Chris Mason yes that's what I'm trying to avoid. I'm doing a cash out refi to pay off a hard money loan so every month is costing me money. Just trying to minimize the extra expenses as much as possible.
I just heard from the mortgage company and they are putting the refinancing on hold until the issue is resolved. The title company said they can not process it until it's cleared. So now I"m hoping to get it resolved as quickly as possible. It's not worth 15k to pay it and it's completely absurd to begin with so I'm working to get it dismissed or reduced.
I'll post an update with the end result, this would be good info for anyone else who might be caught in this same predicament.
Hey look, I predicted the future once again. :P
@Aaron Cullen , depending on just how crummy your hard money financing is, it's worth doing a calculation to figure out at what point it's worth sucking it up and paying the liens off yourself instead of paying another X months of
rent mortgage payments at the hard money rate.
I don't know the answer because I don't have all the numbers, but it's worth it for you to do the math just so you know where you sit.
I always hated dealing with code... They always found something to stop the process...
I once had a property I sold and was selling it as is... but that didn't matter to them... my first encounter was the backyard... needed to be cut(grass) all the way to the end of the fences...
The second was, THE BULB UNDER THE VENT RANGE WAS OUT and needed to be replaced... Now remember, I said I did the paperwork to sell as is... and he failed me for that too... I WANTED TO KARATE CHOP HIS FACE.!!!
All problems when dealing with real estate buying and selling become unique...
Good luck with getting it done...
Just wanted to post an update to my post.
I closed on the cash out refi on both rental properties I had. Yayyyy....
Here is what I learned:
1. If you have a city nuisance against the property that you are disputing you can still close on the property if you ask the title company to get an ok with the bank if they will agree to hold the money due to nuisance in escrow until the issue is resolved. That way they will have a guarantee it will either get paid or resolved.
2. I was able to get the city nuisances reduced from 5k to 500$ and 10k to 500k on two properties. The process took about 8-10weeks from start to finish and that was with me calling every other day to help push along the paperwork to the various stages of government.
3. Both of these nuisances got past unnoticed on my initial closing when purchasing these properties. I will be making a claim with the title insurance to see if I can get reimbursed for the $1000 I had to pay to resolve them.
If anyone ever needs advice on how to deal with a nuisance in Indy give me a shout! I've had more than enough experience now ;-)