I currently have a lien on a property here in Hot Springs, Arkansas and received notice from COSL that the property was tax delinquent and slated for sale in July. I contacted COSL and was told my lien could be wiped away and I needed to contact an attorney. Any input from local investors as to what my best course of action would be to be able to maintain my lien or collect the debt?
@Chris Sayadian , I'm not local and do not know Arkansas laws. For what it's worth, in my State , Washington (and probably in every State), a lien holder such as yourself, has the right to protect their lien by paying the past due taxes. The amount you pay for the taxes, penalties and fees can then be added to your lien (together with 12% annual interest in WA). That is a good return -if there is the probability that you can eventually collect it. So the real question is whether your lien position in the property is worth protecting. For example, if this is a $100,000 property with a $75,000 1st Mortgage, and a $15,000 Lien or 2nd mortgage ahead of you, then the property has $90,000 worth of debt that must be paid before your lien gets anything. If there is only $10,000 in equity and it may not be worth adding thousands more to your lien.
Depending on the type of lien, your lien can either be foreclosed, or you can use your lien to file suit for a judgment that can be foreclosed. Meaning that you can force the property to be sold at auction. That strategy can be effective if there is significant equity in the property. Also, if you did intend to foreclose, it can be even more effective to buy an assignment of any liens that are Junior to yours, at a steep discount. Then at the Auction you would only need to pay the amount of the senior liens and you could add the full amount of your lien together with any junior liens to your bid, so that you outbid potential competitors. Best wishes. Let us know what you decide.
@Mr Davido this property was inherited by a former tenant. I sued the tenant for damages solely based on the fact that they inherited this property and I could place a lien after recieving my judgement. I imagine the property is paid for, As she inherited it from her mother, and I dont think she would have paid the mortgage the same way she has not paid the property taxes.
@Chris Sayadian Congratulations on your lien for damages. So you've already been awarded a judgment against the former tenant, your lien is recorded, and because your have a recorded interest (your lien) the COSL has notified you that the property is about to be foreclosed since no one has been paying the property taxes. Is that your current situation?
It sounds as though you also "imagine" the property has considerable equity. It is time to be certain. I would either have a title company work up a preliminary title report or go to the recorder's office and search myself for what liens, judgement, etc are recorded on the property. Remember that other liens will almost certainly be superior to yours, but equally true, they can typically be acquired for pennies on the dollar. Superior liens can be a good sign. If you acquire an assignment of a $60,000 lien (that was filed before yours) for a cash payment of a few thousand (5 to 10% of the amount currently owed on it), and then foreclose both that lien and yours, you could be looking at a return of near $50,000 on the acquired lien, plus full payment on yours. Not bad for six months of foreclosure work done by your attorney.
So research the title, confirm that there is significant equity in the property, acquire a discounted assignment of any other liens, and proceed to cash out by foreclosing your lien. (or to acquire the property)
Should be straightforward. But I'd also work to acquire the title rights held by the current heir and former tenant. If you are successful in acquiring a senior lien at a discount, then go to your former tenant, explain that your company owns the debt on the property and must foreclose, but offer the former tenant an incentive to quit claim the property over to you. If you can get title without going through with the foreclosure, it saves attorney's fees, your time and the potential for property destruction. Well done so far. Now just finish it. Acquire any debt (liens) existing on the property and foreclose.
@mr davido Yes that is exactly what is happening. Thank you fro the great information! it is exactly what I was looking for!
@Chris Sayadian - Your lien will likely be extinguished when the property is sold, unless you (or someone else) redeem the property within 10 days of the sale. I'd encourage you to contact an attorney right away.
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