Happy new year to all my fellow investors!
This deal is a little above my experience but I want to learn the ins and outs since I am now into the deal and am familiar with the processes. Hopefully I can get some feedback.
We had a deal come across our plate from a new wholesaler at the beginning of December. The property was obtained by the current owners/hoarders through an estate. (Mother passed away) The owners did not pay their taxes for years and as such had a tax lien imposed on the property. The wholesaler has negotiated with the owners to pay this lien with the sale of property and has a contract in place. There was also a court order that gave rights to the wholesaler to do such. We are currently locked in to purchase the property at $190K with a flex option agreement; however, title came back with some issues. After title was run, a long lost brother came up and seems to have a legal interest with the property. He is trying to get more out of the wholesaler which could shut the whole deal down. We have two options here.
1. The wholesaler can negotiate with the brother to settle on a price that would make sense for everyone, easier said than done or
2. Let the property go into foreclosure.
Is there anything we can do or suggest to the wholesaler to save this deal or are there missing pieces to this story that I should question the wholesaler about? Any feedback would be appreciated.
First things first. You need to figure out whether long-lost brother's sudden appearance actually has any effect on a valid, enforceable contract with the administrator of the Estate ... or whether people are trying to squeeze more money out of this deal.
In some states you could just go to the tax sale and bid on it. The tax deed would wipe out any liens. The brother would also be wiped out. I dont know much about NJ tax sales. I works in IN
If you could find the lender and buy the paper (Loan) from them you would be able to foreclose on it and wipe everyone out yourself. Not all institutions will deal with selling one bad loan but it happens.
Hope this helps. GC
@Edward Kozic there is an important distinction that relates to @Tom Gimer s point. Does the long lost brother have an interest in the property, as on title somehow, or does he have an interest in the estate. I suspect, but you need to verify with an attorney, that if he has an interest in the estate, your contract is valid. He may have a legal claim against the estate administrator.
If he is on title to the property itself, then the estate does not have clear title to sell you. You could make the argument that is the estate's problem, They are obligated to you even if that means they have to come out of pocket to deal with the brother. Again, you would have to verify with an attorney if that is an argument that would hold water.
@Ned Carey Good point, Ned...
I may have the sequence wrong but the issue is as you stated. The appearance of long lost brother doesn't give him the right to interfere with a court order or a ratified contract. If he has legal issues, he needs to buck up and litigate them. Or, he can negotiate with the heirs for a piece of the existing pie -- not a bigger one -- if he has a valid claim.
Keep us posted as this is an interesting one.
Gents- great points and suggestions. I want to be sure to ask the right questions so this feedback is exactly what I was looking for. I will keep you posted.
@Edward Kozic , there is no doubt that your best and most-technically sound advice is already above @Tom Gimer , @Ned Carey . Pay close attention to the Title claim v. Estate claim nuance. You should definitely have someone run that Title, if you haven't already. In this case, it will necessarily need to include the probate records as well. You may find that someone was cut out of an estate or was offered "something of value" prior to the death of the Owner, and that something reduced his available inheritance upon passing. This stuff happens all the time in families (especially bickering ones!) You never know.
But I'm surprised that no one has already mentioned a simple appeal to logic here: it should be stated quietly but firmly and often that a bona fide purchaser (that is, you) is interested in acquiring this physically and monetarily distressed asset for a reasonable, already-negotiated price, and that the Brother has the choice of accepting that price, or getting wiped out and receiving literally nothing.
If you make that a mantra, the sisters and the wholesaler should eventually be able to impress the fact upon the hold-out.
Money talks, especially when the option is 'no money at all.'
Good luck-- I'm interested to see what happens here, too.
@Steve McGovern Good advice as well... but don't forget that there is a middleman here. The bona fide purchaser for value is a "new" wholesaler who just might cave under the pressure and screw everything up for everybody including OP.
Agreed in full. I'm completely aware of that, @Tom Gimer , but you're right, the risk should be stated to @Edward Kozic too. For my part, this is where my concept of 'quietly but firmly' comes into play. It's also where someone with some experience can assert his experience into the situation, despite the greener third party conduit.
Any new wholesaler is looking solely forward to his/her cut, but they should be looking now at managing the communication between the parties. Make sure he/she understands that, Edward. Thereafter, use that anxiety that Tom mentioned to get the wholesaler to repeat the mantra up-line.
Hey, even us Agents need to go through agents-- sometimes it's a professional, sometimes it's a 'friend of someone who knows a thing about a thing.'
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