Deal in the works. Or maybe not?

Question

I just got a house under contract. The person selling (we'll call him T) obtained the house under a 3 year land contract with a balloon, he put 50k down on a 200k house. He told me he the land contract ends at the end of November. I spoke with the original owner (We'll call him S) of the house and he told me the contract expired October 31st. T hasn't paid the balloon and is living there without permission.

I'm buying the house for 130k. T doesn't want me to give any numbers or details to S about what's going on, other than we have it under contract and are buying it.

My question is: Does T have the legal right to sell the house to me? He hasn't been foreclosed on so I'd like to say yes.

Do I owe anything to S? What, if anything, will I need to disclose to him?

Thanks for any input!

Brent Coombs · Answer

The original LENDER will come chasing ALL their money from whoever says they own it!

(I bet it's more than $130k that's owed!) Do you want it to be YOU who's being chased?

Not having been foreclosed on doesn't negate the Lender's Lien.

It's not you who has to disclose to "S" what's happening, it's "T".

In any case, it will all come unstuck once it hits the Title Company.

I suggest: don't put ANY money down on this unless you can get this over-ridden properly. My 2c!

Charlie Fitzgerald · Answer

1.  S will have a lien on the asset...at some point T, will have to deal with S...

2.  I would ask T for a copy of the Land Contract...if he won't provide it, I'm not working with T any longer and am going straight to S

3.  T sounds a bit sketchy and I would be very cautious...certainly no money should go from you to T, directly

Charlie Fitzgerald · Answer

The first thing to figure out is whether the contract T has is expired...

T can't sell without satisfying his debt to S and getting a deed in T's name recorded...

David Rawls · Answer

@Charlie Fitzgerald I've seen the Land Contract and am working on getting a copy of it right now. He is a little sketchy.. but hopefully with enough caution I'll be able to pull through.

@Brent Coombs On that Land Contract he owes 127k and some change. It's an all cash purchase and it won't be given outside of the title company.

Will S need to be at the closing? It is still T's property to sell for the time being correct?

Obviously S doesn't want to sell for 130k. He could foreclose and get someone else in there with another big deposit.. Im working on getting a title search right now. Should I just go to the title company with the contracts and ask what to do?

Deal in the works. Or maybe not?

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