Would you tell your bank

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Would you tell your bank

David Finley
Investor · London, KY · Member since 2017 · 41 posts · 8 votes
I have a property that was landlocked and sewage lines crossed families property to the city. The issue the family has decided to cut my access to sewage access off and won’t even talk about turning it back on. I don’t have any savings to pay for a lawyer and I owe about 150k on the property that was just appraised for 200k. Would you tell your banker about the issue or would you just keep plugging away trying to correct it?
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Sam Hopkins
OH (ohio) · Member since 2016 · 63 posts · 43 votes
7y
@David Finley look up implied easement and prescriptive easements. You may have one or the other.
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y
    @David Finley Is there an easement for the line to run across the property ? Was it installed illegally?
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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    You likely are going to Have to get a lawyer involved.

    Can you tell us Why they decided this....a family argument or property issues?

    0Reply
  • David Finley
    OP
    Investor · London, KY · Member since 2017 · 41 posts · 8 votes
    7y
    @Chris Seveney no easement ever givin. It was my dad’s townhouses and the trailer park was my grandparents he took care of it for them. My dad died and I bout them from my siblings and step mother with no easement.
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  • David Finley
    OP
    Investor · London, KY · Member since 2017 · 41 posts · 8 votes
    7y
    @Wayne Brooks my aunt and uncle are druggies and think because I have bought more that I’m rich and can offered to buy their junk for way to much money.
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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y

    This issue is too complicated to get a "correct" answer in BP forums. It's time to talk to a Kentucky property law attorney about easements, prescriptive, by necessity, etc.  And not just for the utilities.

    I see your comment about money for attorneys. A consultation and demand letter are not going to break you.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Hire an attorney. They can usually give you a free consultation to start and that might give you an indication of what it would cost to get this wrapped up.

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  • David Finley
    OP
    Investor · London, KY · Member since 2017 · 41 posts · 8 votes
    7y
    The question would be would you tell your banker?
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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    I don't know what purpose it would serve to speak with the lender. They may be able to loan you money to hire an attorney?

    If your property is landlocked, you must have recorded easements. If there are no recorded easements, then you can fight for easements but that requires money and an attorney.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y

    I would absolutely tell the bank. No utilities I assume means soon no rental income and eventual foreclosure. There may be potential title insurance claims here as well.

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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    7y
    Originally posted by @David Finley:
    I have a property that was landlocked and sewage lines crossed families property to the city. The issue the family has decided to cut my access to sewage access off and won’t even talk about turning it back on. I don’t have any savings to pay for a lawyer and I owe about 150k on the property that was just appraised for 200k. Would you tell your banker about the issue or would you just keep plugging away trying to correct it?

    David

    Something doesn't sound right and I would contact my lender and the title attorney who did the closing on your loan.  How did you get a landlocked property with sewage lines that cross other properties without a recorded easement?

    As others have said, get an attorney to give you advice.  I'd go to my previous title attorney first and then the lender if you aren't able to break the deadlock.

    Stephanie 

    1Reply
  • Sam Hopkins
    OH (ohio) · Member since 2016 · 63 posts · 43 votes
    7y
    @David Finley look up implied easement and prescriptive easements. You may have one or the other.
    4Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    7y
    Originally posted by @Sam Hopkins:
    @David Finley look up implied easement and prescriptive easements. You may have one or the other.

    Thanks Sam Hopkins.  I learned today.

    Stephanie 

    0Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    @David Finley,

    Check out your state laws on adverse possession.   Even if it wasn't officially done, it may be a legal right now.

    I would tell them, just because they will likely find out 1 way or another.

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Going to the lender could Create problems, not solve them. Lenders don’t guarantee title.....they just lend money and get title insurance for themselves. 

    1Reply
  • Chris London
    Property Manager · Raleigh/Durham NC · Member since 2015 · 210 posts · 293 votes
    7y

    Easement of Necessity: Your property exists with no access to a public roadway due to surrounding properties owned by others. However the situation may have been created in the first place, most states recognize that a property owner has a right to be able to enter and exit his property – called the right of ingress and egress. In this case, a court may issue an order creating an easement by necessity allowing the owner of the property with no access to cross the neighboring properties unrestricted. I don't believe this applies to the sewage access.

    1Reply
  • Clinton Fisher
    Member since 2018 · 41 posts · 23 votes
    7y
    @David Finley I would check with my title insurance company they're supposed to insure you again stuff like that.
    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y

    @Wayne Brooks Which do you think will get better results here... 

    1) Owner does nothing OR 2) Owner alerts deep pocket lender that their investment may be in jeopardy, and why

    If the initial scare from the attorney letter to the adjacent owner doesn't resolve this, the issue might still be resolved by a lenders title insurance claim. In these parts we cannot include a survey exception for lenders coverage even if a survey was not undertaken (and access is a covered risk). The issue might either need to be settled or litigated... by attorneys on behalf of the insurer and without OP lifting a finger.

    My point is that getting others involved when the alternative is doing nothing can't possibly hurt.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    @Tom Gimer Okay, I see....get the lender scared and they put pressure on their policy title insurer.  I’m guessing there was no survey done, hence no one discovered the “land locked” issue? Isn’t a survey typically required for  title I surance, or either there is an exception for any issues arising out of /missing in not having a survey?

    I’m guessing the OP’s best shot is a prescriptive easement here, depending on state statautes,  But......I just got home after a night out  with a few martinis and scotches mixed in....

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  • Marisa R.
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Why would you tell your banker, unless there would be some advantage/benefit doing so. 

    In the first instance I would be getting legal advice.... asap

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Stephanie P.:
    Originally posted by @David Finley:
    I have a property that was landlocked and sewage lines crossed families property to the city. The issue the family has decided to cut my access to sewage access off and won’t even talk about turning it back on. I don’t have any savings to pay for a lawyer and I owe about 150k on the property that was just appraised for 200k. Would you tell your banker about the issue or would you just keep plugging away trying to correct it?

    David

    Something doesn't sound right and I would contact my lender and the title attorney who did the closing on your loan.  How did you get a landlocked property with sewage lines that cross other properties without a recorded easement?

    As others have said, get an attorney to give you advice.  I'd go to my previous title attorney first and then the lender if you aren't able to break the deadlock.

    Stephanie 

    this is the exact scenario where people landlock themselves  one family owns two separate proeprties they sell one and zone out on giving them selves and easement.. and the next thing you know its landlocked.. I have tried to fight this battle on the West coast and you can for sure landlock a property if  the person owned both properties and failed to give a together with easement when they sold one .

    the easement by necessity sounds like the play here and then its up to a trier of fact and maybe the other party wont want to spend legal fee's defending. ??? who knows..

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Tom Gimer:

    @Wayne Brooks Which do you think will get better results here... 

    1) Owner does nothing OR 2) Owner alerts deep pocket lender that their investment may be in jeopardy, and why

    If the initial scare from the attorney letter to the adjacent owner doesn't resolve this, the issue might still be resolved by a lenders title insurance claim. In these parts we cannot include a survey exception for lenders coverage even if a survey was not undertaken (and access is a covered risk). The issue might either need to be settled or litigated... by attorneys on behalf of the insurer and without OP lifting a finger.

    My point is that getting others involved when the alternative is doing nothing can't possibly hurt.

     I get ingress egress to public road is a covered item in title insurance going through one right now.. but easement for utls.. Is that included if it is.. then your right this goes right to a title claim and let the title insurer duke it out.. plus the lender probably has a lenders policy.. ??? not sure how that plays in .

    My landlock situation was quite complicated.. and Chicago missed it.. they have been 2 years battling to get it done for me.. 

    we had a neighbor and a state owned trail to cross. turns out the state owned trail there is NO way to force that in Oregon.. but the buyer for the property is the local metro open space. so the state kind of rolled over .. but they did not have to.. then we had the neighbor that we had to sue..  and they finally caved since Metro is buying it and will use the property for perminant open space.. this is a 500k chunk of dirt.. out in the semi  boonies of Oregon.. LOL..   

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  • Christi HawkinsPro Member
    Columbus, OH · Member since 2017 · 239 posts · 142 votes
    7y

    @David Finley your lender will find out eventually so you may as well be honest upfront. They won't lend if the property doesn't have a functioning sewer system. But I agree with @Nathan Gesner you're putting the cart before the horse. There's no need to speak with a lender until you have this settled.  

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  • David Finley
    OP
    Investor · London, KY · Member since 2017 · 41 posts · 8 votes
    7y
    @Christi Hawkins the issue is my lender is doing a refinance on the property at this time. What worries me is if I don’t tell them they will pull the note anyway.
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  • Christi HawkinsPro Member
    Columbus, OH · Member since 2017 · 239 posts · 142 votes
    7y

    @David Finley Oh im so sorry I didn’t realize that Has the appraisal been done yet? You have to tell them because it affects their collateral Title should reveal the property is landlocked with no easements and that should start the questioning  If you want to continue to build a relationship with this bank you tell them now before they find out you’ve been keeping this bit of information to yourself You might be surprised When I worked at a bank we used to help people try to solve stuff like this all the time 

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y
    Originally posted by @Wayne Brooks:

    @Tom Gimer Okay, I see....get the lender scared and they put pressure on their policy title insurer.  I’m guessing there was no survey done, hence no one discovered the “land locked” issue? Isn’t a survey typically required for  title I surance, or either there is an exception for any issues arising out of /missing in not having a survey?

    I’m guessing the OP’s best shot is a prescriptive easement here, depending on state statautes,  But......I just got home after a night out  with a few martinis and scotches mixed in....

    Exactly. Lender gets involved to protect its interest while at the same time potentially helping OP. I'm focusing on the use of the word "landlocked" here... not sewer. But the utilities issue could be wrapped into the same dispute if it came to that.

    Without a current survey, or a recent survey and survey affidavit from the seller, the survey exception would remain in the owners policy... not so with the lender's policy -- they always ask for and expect for this exception to be removed and all TI insurers (at least on this coast) do so for residential. 

    Irish whiskey for me.

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