One of my sellers died before signing contract

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One of my sellers died before signing contract

Dave Martel
Electrical Contractor · Vail, CO · Member since 2010 · 40 posts · 10 votes

Hello BP, I hope someone can help me out with this.

I got a call Friday from a motivated seller and met them on Sunday. It turns out the house is owned by three siblings ( two sisters and a brother) all of whom are on social security. The brother became ill a while back and was placed in a nursing home. With the loss of his income the two sisters fell behind on the mortgage and the house is in foreclosure, cure deadline is Oct 15.

After walking through the house and speaking with the sisters we made a deal and they signed my contract. I spoke with the daughter of the brother and she agreed to the deal as well and was working to get power of attorney.

When I got home today I had a message from one of the sisters saying that the brother died this morning and his daughter wasn't able to get the power of attorney signed. I haven't called back yet and don't know if there is a will.

So where do I go from here? The sisters still want to sell and I'm waiting for a call back from the law firm working the foreclosure to try to push the sale. I feel super awkward calling to find out if there is a will but if there isn't I would imagine it could take months to get sorted out. Even if there is a will wouldn't it still take a while? I already did a title search and it is not a joint tenant deed.

What do you all think?

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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y

With or without a will, the brother's share is now owned by his estate, until it is transferred to heirs or beneficiaries. His relatives will have to figure out how they will proceed, as they may have other estate assets and/or debts to deal with. IMO, the positive is that you have two community property owners, the sisters, that are motivated to sell.

Nothing is stopping you from buying the interests that belong to the sisters. As an owner with an undivided 66% interest, you would be in a pretty good position to solve the brother's estate issue if the heirs don't rally. The challenge would be getting the sisters to accept the discount that is appropriate for buying partial interests. Appropriate discount = dirt cheap. In my experience the partial interest offer often motivates the other owners/heirs to solve estate and probate issues asap.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    With or without a will, the brother's share is now owned by his estate, until it is transferred to heirs or beneficiaries. His relatives will have to figure out how they will proceed, as they may have other estate assets and/or debts to deal with. IMO, the positive is that you have two community property owners, the sisters, that are motivated to sell.

    Nothing is stopping you from buying the interests that belong to the sisters. As an owner with an undivided 66% interest, you would be in a pretty good position to solve the brother's estate issue if the heirs don't rally. The challenge would be getting the sisters to accept the discount that is appropriate for buying partial interests. Appropriate discount = dirt cheap. In my experience the partial interest offer often motivates the other owners/heirs to solve estate and probate issues asap.

    2Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    13y

    Reminds me of the horse my Dad once bought with two other friends. He insisted that his share was the middle, hence he got to ride but did have to feed or clean up. His buddies only laughed, but I never saw them ride it.

    There are a number if plays here. KMP has pretty well nailed the basics here however, this could be pretty messy.

    Another play is to buy the interests from the two Sisters as well as the loan and complete the foreclosure yourself. You'll either get clear title or be entitled to 2/3 of the surplus funds which have a funny way of turning into 100%.

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  • Ibrahim Hughes
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    13y
    Originally posted by K. Marie Poe:
    With or without a will, the brother's share is now owned by his estate, until it is transferred to heirs or beneficiaries. His relatives will have to figure out how they will proceed, as they may have other estate assets and/or debts to deal with. IMO, the positive is that you have two community property owners, the sisters, that are motivated to sell.

    @Account Closed In NJ it would depend on how the property was titled. If titled in the three siblings names as "joint tenants with rights of survivorship" then the Brother's share automatically transfers to the two Sisters upon death. At least that's my understanding.

    @Dave Martel

    - I would send flowers and attend the funeral as well as the repast. My guess is that between the funeral and repast, one of the Sisters (or perhaps the daughter) will mention the real estate issue which opens the door for you to discuss it further. Does CO allow for defendants to delay foreclosure. Here owners are entitled to two 2 week delays.

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  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    13y

    @Dave Martel , just a few observations bud. One the value of the house is super important. Most states have simplified probate proceedings probate for small estates. In my state that means under $200K. The way the property is titled also is very important. A joint tenants with rights of survivorship (JTWROS)usually just require an affidavit to vest ownership in the survivors. Tenants in common however does not vest ownership in the surviving owners. The will, or if no will the intestate heirs could sell you their right to ownership even before the probate is finished, but full title would have to wait until the probate transfers it. that method has some risk as bills get paid off before property gets given away so it could be sold to pay bills. If a formal probate is started the judge could order an immediate sale to preserve the asset from foreclosure. There may be problems that could cost you the purchase, but there are many ways you could still sort it out quickly. Don't give up get the advice of a good probate/estate attorney in your state. If you are in Colorado I think they have a simplified probate there.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y
    Originally posted by Ibrahim S:
    Originally posted by K. Marie Poe:
    With or without a will, the brother's share is now owned by his estate, until it is transferred to heirs or beneficiaries. His relatives will have to figure out how they will proceed, as they may have other estate assets and/or debts to deal with. IMO, the positive is that you have two community property owners, the sisters, that are motivated to sell.

    @Account Closed In NJ it would depend on how the property was titled. If titled in the three siblings names as "joint tenants with rights of survivorship" then the Brother's share automatically transfers to the two Sisters upon death. At least that's my understanding.


    Same is true here. But the OP says he looked at the deed and that the siblings don't hold title as joint tenants. If they did, this would be a slam dunk, as the sisters would own 100% and could proceed with the sale.
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  • Ibrahim Hughes
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    13y
    Originally posted by K. Marie Poe:
    Originally posted by Ibrahim S:
    Originally posted by K. Marie Poe:
    With or without a will, the brother's share is now owned by his estate, until it is transferred to heirs or beneficiaries. His relatives will have to figure out how they will proceed, as they may have other estate assets and/or debts to deal with. IMO, the positive is that you have two community property owners, the sisters, that are motivated to sell.

    @Account Closed In NJ it would depend on how the property was titled. If titled in the three siblings names as "joint tenants with rights of survivorship" then the Brother's share automatically transfers to the two Sisters upon death. At least that's my understanding.

    Same is true here. But the OP says he looked at the deed and that the siblings don't hold title as joint tenants. If they did, this would be a slam dunk, as the sisters would own 100% and could proceed with the sale.

    Aaahh the last line of the original post - totally missed it. Smh.

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    13y

    @Dave Martel

    {removed my own response, as I reread the OP and noted that ownership was not a joint tenancy}

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    13y

    I would not attend the funeral of someone I never met and explain to that family why I was there......

    Inform the Trustee of the death. Contact an estate attorney. You could buy the remaining interests and payoff the loan. If you buy, purchase with a warranty deed on those interests and see if you can obtain a quit claim for any future interests through your attorney. If you can't do a future conveyance get an agreement to convey that interest when the estate issue is closed, by either action.

    I doubt a bank would sell a note that was a matter of probate.

    I'd +1 with Jerry, see an estate attorney and let the dust settle. Get a signed contract from the other two with an extended closing date allowing time to cure the matter. :)

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  • Michael Quarles
    Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    13y

    IMHO the responses on this post is exactly why BP is extremely valuable.

    0Reply
  • Dave Martel
    OP
    Electrical Contractor · Vail, CO · Member since 2010 · 40 posts · 10 votes
    13y

    Hear Hear Michael Quarles

    Thank you everyone for your responses, they have been extremely helpful.

    I spent part of the day trying to get to the bottom of this and didn't get to far. I don't believe there is joint tenancy but there seems to be some confusion in the O & E report. I'll try to explain.(This was my fist deal BTW so this is all new to me)

    The oldest record on the report is a QCD from 1998 that shows the mother and brother as owners and they added the 2 sisters. This QCD shows joint tenancy. In Feb 2003 there is another QCD where everyone gives back ownership to the mother and 1 sister and there is no mention of JT. They then pulled a bunch of money out and there is a deed of trust from Feb 2003 that states there is JT. Then in March 2003 there is another QCD where the mother and sister add the other sister and brother back in, again no JT mentioned. This is the vesting deed. Then again in April 2003 they all pulled more money out and this deed of trust again says there is JT. In 2005 the mother died and a different brother (from Iowa) filed a death certificate and affidavit stating his mother was part owner in JT and he had no claim to the property. The mothers name is still on the deed although the sisters were named executers and said they filed some paperwork in Iowa.(not sure exactly what they filed)

    So as I understand it , there is no JT because it isn't specifically mentioned on the vesting deed, and the deeds of trust carry no weight, but everyone seems to think there is JT. (as far as the family and the 2 banks are concerned)

    I called the trustee and they said there is nothing they can do about the auction and that it is up to the bank. I've been trying to reach the law firm representing the bank for three days now with no luck.

    I did talk with the 2 sisters today and as it turns out, the woman I thought was his daughter trying to get POA was actually his niece. He never married and has no kids. They also said as far as they knew the only debt he had was 2 credit cards totaling about $6200 and no will. I could easily pay these 2 cards and still make a good profit on the deal.

    I know nothing about the probate process but I will contact an estate attorney tomorrow to see what I can find out.

    Any additional advice would be greatly appreciated.

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  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    13y

    Anecdotal evidence aside, could you refresh us as to:

    Your estimate of current value?

    Amount of debt owing?

    Estimated cost of fix up?

    ARV?

    Current vesting per Title company prelim?

    It's easy to get lost in 'what-if' land and I'd like to see if equity the OP is chasing is significant.

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  • Jean BolgerPro Member
    Aurora, CO · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    I do know, from personal experience, that a Power of Attorney does not survive death (in CO), so the fact that one didn't get signed is a non-issue. Beyond that I can't help, sorry.

    1Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y

    @Jean Bolger beat me to it - the POA died when the person who granted the POA died. (Aside: Sub2 investors are advised to get a POA to deal with the lender, but if the original borrower kicks the bucket ... so does the POA.)

    0Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    You're making a lot of assumptions that aren't serving you. The current vesting may well be joint tenants. How about you get a title report and/or ask a title company what they need to insure title and for your sale to go through.

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