HELP Seller has $32k in Judgements on a $10k Property...

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HELP Seller has $32k in Judgements on a $10k Property...

Taylor Jennings
Indianapolis, IN · Member since 2013 · 354 posts · 90 votes

Here are the details:

Seller's House Price: $10,500

Judgements: $32,700

My Wholesale Fee: ~$6,800

Closing Costs + Back Taxes: $1,700

Buyer Cash Offer: $19,000

The seller owns (4) total rentals including this one and I believe would be willing to sell the others under the circumstances.

One house I looked at is in bad shape and not in a very good area, but I could probably offer $3k on it.

I'm not sure what condition the other houses are in.

Here is the Title Work on the primary house: http://bit.ly/1f5Mfq3

I was told that the $12,965 will fall off December, 15th because it will be 10 years old?

Should I negotiate a price for all of the properties with the offer to pay off the judgments and let them walk away from the total owed?

Should I wait until December?

How should I structure this... Thanks.

(Stinks to have to go through this on my first deal!)

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Leonard L.
Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
12y

But no, you would not need an attorney to negotiate the discount. If you want to try that route, first ask the title company for a release form subject to payment. Then you and the creditor fill out the amount to be paid to release the lien and submit the document to escrow. Make sure the form does not OBLIGATE you to pay, but rather says IF you pay this amount in the next 30 days, by creditors signature on the document, escrow is instructed to release the lien. That way, you can have one creditor sign while you are still working on the other creditors. But again, with so many different creditors, this is a huge long shot.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    12y

    Judgments can of course be negotiated for huge discounts. As to the one judgment expiring at 10 years...assuming that's state statute and it's not renewed..talk to an attorney.

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  • Taylor Jennings
    OP
    Indianapolis, IN · Member since 2013 · 354 posts · 90 votes
    12y
    Originally posted by Wayne Brooks:
    Judgments can of course be negotiated for huge discounts. As to the one judgment expiring at 10 years...assuming that's state statute and it's not renewed..talk to an attorney.

    Would I need the attorney to negotiate the discounts?

    What type of attorney would I use?

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  • Leonard L.
    Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
    12y

    I would steer clear of this one.

    Liens are purely a product of state law, so they will be governed by Indiana law. You are unlikely to get state specific legal advice here, and also unlikely to afford an attorney for a deal this small.

    Your best bet as suggested above is a heavily discounted pay off. You negotiate paying, say 5-10% of the outstanding balance at the closing, they put a demand into escrow along with a release, and it could work. But I looked at the judgments and they are from multiple parties. The chances of you contacting every lien holder, negotiating a huge discount, and successfully getting all those docs into escrow is very small. And all that for a very small profit on this house anyway after discounted judgements and closing costs.

    I would look for another deal. Sorry.

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  • Leonard L.
    Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
    12y

    But no, you would not need an attorney to negotiate the discount. If you want to try that route, first ask the title company for a release form subject to payment. Then you and the creditor fill out the amount to be paid to release the lien and submit the document to escrow. Make sure the form does not OBLIGATE you to pay, but rather says IF you pay this amount in the next 30 days, by creditors signature on the document, escrow is instructed to release the lien. That way, you can have one creditor sign while you are still working on the other creditors. But again, with so many different creditors, this is a huge long shot.

    1Reply
  • Taylor Jennings
    OP
    Indianapolis, IN · Member since 2013 · 354 posts · 90 votes
    12y

    @Leonard L. I spoke with the seller and he said that he recently sold a house for $28k and the title company he said he used said that money went toward paying off the judgments.

    That was about a month ago.

    My title company picked all the same judgments up so I assume it may take at least a month for that data to be updated?

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  • Leonard L.
    Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
    12y

    again, depending on the state, it may take longer than a month. could be much longer.

    Instead of waiting, I would have your title company contact the title officer from his last deal and confirm the pay off. The old title or escrow officer can provide copies of the release documents, which in turn should be enough for your title company to eliminate them from your buyer's title insurance. That's assuming what you are being told is true.

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  • Taylor Jennings
    OP
    Indianapolis, IN · Member since 2013 · 354 posts · 90 votes
    12y

    @Leonard L. You're the man.

    I've spoke with the seller earlier and requested he do just what you said =)

    I've got their previous title agent and contact info + the court papers they received which released their previous lien.

    Hopefully this transaction goes through! I've been somewhat stressed out today.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    The lien release letters might have just applied to the lien interest on one of the properties and not all.

    You can use a consumer debt attorney but I have found they charge huge amounts of money 500 upfront plus so much per hour and do not promise squat. All the judgment holders want is money. It will be really tough to get them to release for next to nothing when you are making a wholesale fee.

    Keep working it and see what happens.

    As far as a judgment expiring you have to know the lien laws of your state. Some states you might not can renew and others you can.

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  • Brian P.
    Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
    12y

    Step one, find out if judgment can be renewed in your state, they can be in the states I invest. Second get an option for the judgments at very steep discount, third swap the judgments at present value due for property.

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  • Taylor Jennings
    OP
    Indianapolis, IN · Member since 2013 · 354 posts · 90 votes
    12y

    @Joel Owens @Brian P. Thank you so much for your replies!

    Good news. The judgments were taken care of in a previous sale the owner made and I am closing on the house today =)

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