All Forum Posts by: Davido Davido

General info on Statute of Limitations Clock from Nolo 

http://www.nolo.com/legal-encyclopedia/the-statute-limitations-foreclosure-actions.html

When Does the Clock Start Running for the Statute of Limitations?

The statute of limitations clock for a mortgage foreclosure usually starts when the default occurred. (The “default” is, for example, when you stopped making mortgage payments.) It is usually calculated from the date of the last payment or from the due date of the first missed mortgage payment.

To learn more, see When Does the Clock Start Ticking for the Statute of Limitations?

Stopping a Foreclosure

If the foreclosure starts foreclosure proceedings after the statute of limitations has expired, the lender’s claim is invalid and the lender is not entitled to foreclose.

The Statute of Limitations Is an Affirmative Defense

The statute of limitations is an affirmative defense to foreclosure. This means it is the homeowner's duty to raise the issue in the foreclosure. If the homeowner does not raise the statute of limitations defense, then the defense is waived and the lender can continue with the foreclosure.

What If the Statute of Limitations Runs Out During the Foreclosure?

If the statute of limitations runs out during the foreclosure, then it is not a defense to the foreclosure. This means that even if a foreclosure takes years to complete, which often occurs in some states like New York where the average foreclosure takes about three years, it is not a defense to the foreclosure.

Example. Say your lender files a foreclosure lawsuit in June 2012, but the statute of limitations runs out in December 2012 while the foreclosure is pending. In this scenario, a statute of limitations defense is not available. To be in compliance with a statute of limitations, the lender only needs to start the foreclosure before the time limit expires.

What If the Lender Cancels or Dismisses the Foreclosure?

If the lender stops the foreclosure action, which often happens if the lender discovers a procedural error, and then refiles the case, the homeowner can use the statute of limitations defense. If the lender restarts the case, it must do so within the time period provided by the statute of limitations.

Example. In the example above, if the lender dismisses the foreclosure in October 2012, the lender would need to restart the foreclosure prior to December 2012 to meet the statute of limitations. However, if the homeowner were to you make a payment in the interim, this will usually reset the statute of limitations.

The Statute of Limitations in the Current Real Estate Market

Most lenders currently have a backlog of delinquent loans for which they have not yet filed foreclosure actions. It may be months or even years between the time that the borrower stops making payments and the lender initiates the foreclosure process. This means that it's important for borrowers to be aware of the statute of limitations for their particular state. It may become a valid defense in a foreclosure action

Sorry Robert, on those facts a Texas lawyer specializing in probate law will have the best answer as to when the statute of limitations clock starts.  I'm in Washington and from this distance would GUESS that the statute of limitations clock started anew on the date that the Judge signed the order acknowledging the banks interest in the debt.  However other possibilities abound and are beyond my expertise.  For example it is also possible that the judges order did not change the clock at all, or that the clock did not begin again until the probate was complete.  Law can be fickle. 

The fact that the banks appeared at probate, prepared an order acknowledging their debt, and that the bank(s) have been paying the property taxes and HOA dues, all indicate that they intend to preserve their interest. I suspect a bank foreclosure is coming. Confirm with an attorney when the clock started. Based on what you learn you may want to contact the bank with a pre-prepared assignment of interest and a amount in mind for what you're prepared to pay. It is possible that the bank will be willing to wash their hands of the problem by selling their interest at a significant discount. A banks willingness to sell/assign their interest can be encouraged if the bank has reason to believe that their attempt to foreclose would be met with knowledgeable resistance and/or repeated delays.

Before or after the bank is willing to assign their interest, you could proceed to acquire a quit claim from the heirs.  If you get a deed you can hold and rent properties, or proceed to quiet title, or still foreclose -depending on your goals.

An assignment of interest is simple and cheap to prepare. It would grant you all the rights the bank has. The sample assignment below was obtained for approximately 14% of the amount owed because the well on that property had problems.   The property would have been condemned without the defect cured.

Hello Robert,

Get a quit claim deed from the heir(s) and record it. Collect rents due  from the tenant. Wait out the statute of limitations on the mortgage debt.  File a quiet title suit to clear all mortgages and debt liens.  Own and enjoy your new property. 

Texas has a statute of limitations on collecting past due debts.  Once that period is past, the debt becomes unenforceable and you can quiet (clear) the title in your name. For most debt, the Texas statute is 4 years, for deficiency judgements it is only 2 years. Texas Property Code Section 51.003 Contact your attorney.

Until you are certain you'll get title only pay the minimum property tax to prevent property tax foreclosure. And do the minimum maintenance to preserve the property. From what you've written, you may have a winner.  I've done several of these, a headache for some, but I found my niche.  It was pleasant work.  Be aware that mortgage holder, and or other investors who may acquire the debt could foreclose at anytime until the statute of limitations runs out.

@Amy B.

Amy your input is heartily welcome here.  Doubly so since you’ve been the only post most encouraging, and triply so since your suggestions are excellent!  Thank you, Amy!

You’re absolutely right that I’m thinking a different direction than most. Question is will that be beneficial or will it lead to remorse?  Imagine if you had to tell your spouse that your idea was presented to the pros and every one of them thought the plan would lead to ruin. Such news could only confirm my sweetheart’s already noticeable concern!It may indeed be that negative feedback is what I needed.It has motivated me toward building more rigorous safety precautions into my plan.With the method I’m looking at things will go wrong at times.

By the way, wonderful photo of you and your husband on your profile.  Couples who work together are a joy to see.  It warms my heart to read that your family is taking seriously what you hear about the economic and banking crisis in Greece.  Especially if you and your husband are going to apply a broader understanding of socio-economic conditions to your real estate business.  Like you, I believe a serious economic and monetary shakeup are coming.  I take caution from the fact that an ever growing number of writer’s whom I respect, expect a big movement soon. http://www.caseyresearch.com/articles/the-next-financial-disaster-starts-here.  Still, despite my respect for guys like Doug Casey, I’m not convinced a big change will be imminent (not expecting it within 3 years). They'll be right eventually, but Casey has been predicting economic crisis since the 70’s.

A phrase that caught my interest in your comments was, “…the main thing is you can not rely on government to take care of you or your future.” If, you mean that we should not rely on the government,  I agree whole heartedly.  It is a large disappointment to me that a visible percentage of our fellow Americans can and do rely upon the government to take care of them.  However, it seems to me that we have a problem deeper than the fact that too many Americans rely on the government. Taking care of ourselves is little problem. The deeper problem is that the existing power structure wants people dependent upon government and is actively exorcizing its control to make independent action more difficult each day. Creating a government which will allow us to take care of ourselves is what I am most concerned about.

Amy, you kindly and generously made an encouraging post. Your suggestion about finding more support in an off grid type group is spot on.  Do you ever listen to Jack Spirko’s www.theSurvivalPodcast.com? I enjoy the phrase he uses, “Helping you to live a better life, if times get tough, or even if they don’t.”   Also, using a nonprofit classification was another excellent idea.  Thanks.  I had not thought of that.  I do work with an attorney. That is another thing we agree on.

Great success for you and your husband

@Jay Hinrichs

@Bill Gulley

@Rick H.

Learning how to use this @ function on the BP system. 

@Jay Hinrich,  -Jay I want to thank you again for giving me feedback on the idea I posted for profiting from taking possession of abandoned real estate.  Your comments indicate surprise that I would post about cutting and selling timber on property that I did not own.

“…to admit to what you did in Washington state on this website were it is permanently archived was a boo boo in my mind.”

Here is why, even if this had happened yesterday, it is highly unlikely that a prosecution would occur.  And why even if a prosecution was started, I am convinced I would prevail. Nothing in my post indicated I intended to deprive the owner of what was due to him.

The opposite is true, my post briefly discussed the “considerable” efforts I took to locate and secure the owner’s interests or permission.  My efforts only ended when I reasonably concluded the man was already dead.

“After considerable research and footwork, including talking to an owner’s previous attorney and all people who could be found at the owner’s last three addresses, I concluded the man had died. I had located a “death certificate” for him in a nearby city that listed his exact name and age. Who knew there was two of him? The presumed dead owner only showed up after I had paid his taxes and logged 30 acres of his land. We settled out court, -a quit claim deed for the approximate value of the timber. I got to keep the property.”

Turns out the quit claim deeds I received were from other parties.  I had the timber owner assign his right in the Real Estate Contract and used his senior lien to remove all others.  The point is that intent to deprive is required under, Washington’s theft statute. http://apps.leg.wa.gov/rcw/default.aspx?cite=9A.56.020

You may note that is a general theft statute, but In Washington State, timber theft from private property is prosecuted under the state’s general theft statute.  There is a specific statute dealing with timber theft, but it is for theft from public lands and this incident was on private land. http://apps.leg.wa.gov/rcw/default.aspx?cite=79.02.310

So I don’t see a problem.The State would not prevail unless, in addition to my admission that I cut the timber, it was also able to prove it was my intent to deprive the owner.  Here the owner was presumed dead.  Before cutting anything, I had enough documentation to convince a jury, if not the prosecutor, that my presumption was reasonable.  Even the owner’s own attorney thought he was probably dead.  I recognize that I could have been prosecuted.  Just as I recognize a person can be prosecuted for almost anything or for nothing at all.  I was far better prepared against prosecution than the average innocent person is.   A prosecution on these facts was so unlikely that the possibility caused no worry.  I’m not saying in my post that taking similar risks would be appropriate for other investors.  Only that cutting the timber was appropriate for me –given the facts of this situation.

@Jay Hinrichs

@Rick Harmon

@Bill Gulley

@Wayne Brooks

RE: Cutting Timber on land not owned.

Hello Jay,  Your comments to my post got me thinking.

“In the state of Washington to get a Harvest permit you Must prove you own the land.. And or have the Land owners written permission on a Logging contract..”[and] “I suspect something is a little off with your posts.. ”

Turns out that you were right!  I did have (sort of, kind of, almost) an ownership interest in that land. I had paid $150 for a quit claim deed from one J. Sowers who had purchased the property on a Real Estate Contract from D Kendrick.  This was in 2003 so it is a number of years ago and there have been other deals done since then.  Which may be why in my initial mention of this project, I did confuse buying that quit claim deed from Sower with buying a junior lien holder's interest. Doubtless because it was cheap and still didn't give me what I needed to log the property.  Sower's never had the right to cut the timber. 

Under the contract between Sowers and Kendrick line number 17. (WASTE) said in part, "Buyer shall not remover commercial timber without the written consent of seller." Standard stuff.

What I do remember clearly to this day, is being in the middle of logging operations when a stranger drove up.  I had walked over to greet him and introduce myself with a welcoming smile.  He didn't shake my hand, or smile back, just gave me a hard look and said, "I sure wish you hadn't logged my property".   It was Kendrick.  I had convinced myself that Kendrick was dead.  He had convinced himself that he was still owner of the property. The following four pages from the title report show some history on the prop.

HSLine 15 Shows the 6 year moratorium on non-forestory use of the property starting in 2003, -the year I logged it.  See RCW 18.16.180

Here is the history, if any of you doubters are interested.

It was a beautiful property, right on the edge of the county line, surrounded on 3 sides by long growing Weyerhaueser timber land.   It was laid out over a gently sloping hill side with several natural springs.  This parcel had 80+ year old second growth covering most of it.  There was a lush spring fed pasture in the lower corner that attracted elk every year, -and a year round creek flowing through the pasture.  Kendrick had put in a good flowing well at the high point on the hill.  He built a home made septic system. Then he set up a single wide mobile home on the hill with a view of the pasture.  People would see the property and fall in love with it.  That is what happened when Jennifer Sowers saw it.  The problem is that this parcel was remote.  It was past the end of the last paved road, then down 4 miles of gravel road, then left thru the gate over 2 miles of Weyerhauser logging road.  Once at the property where there was no real road.  No utilities except what land owner's created themselves. 

For Sowers it was too remote, too hard to keep.  She sold it to Shinn who was a bit of a scam artist.  Shinn managed to owe money to and get liens on the property from the IRS, Washington Dept of Rev, and Washington Dept of Employment Security.  Shinn also wasted the mobile home and neglected to make the payments due on the Real Estate Contract.  When the creditors started closing in, Shinn sold his interest to Daugherty.  Daugherty couldn't figure out what to do with the place.  He abandoned it and moved to Alaska.  Kendrick rightfully got fed up with the lot of them and started a foreclosure action against them all.  But Kendrick wasn't in good health.  He had more pressing problems and did not complete the foreclosure.  Nobody paid the taxes.  The county filed a property tax foreclosure action. Davido started looking for abandoned tax delinquent properties in the area. And this one made the top of his list.

I located Sowers and Shinn and, just in case they might come in handy for paying off the delinquent taxes, I got quit claim deeds from them both for a few hundred bucks. Daugherty couldn't be found by me or by my attorney's professional skip trace.  But Kendrick was the key to making this deal work so we focused on finding Kendrick.  He could not be found at any of his known addresses.  None of his neighbors knew what had become of him.  Nearly two dozen interviews were conducted (written record kept of each) with his past acquaintances, including the attorney who had started foreclosure for him.  Certified letters where sent out, most came back undeliverable.  We had searched hard for Kendrick, but the professional couldn't find him, and I couldn't find him.  His attornery said Kendrick had unspecified health concerns. My attorney said search the death indexes.  I found him dead 1 year prior in a city several counties distant.  We ordered up the death certificate which read exactly right, "David R. Kendrick", same birth date -except 2 years older.   Must be a clerical error.  I personally took the death certificate to Kendrick's foreclosure attorney, who had asked me to keep him informed about my search.  Kendrick's attorney agreed that Kendrick must have passed on.  We bowed our heads in a moment of respect for the dead.

By this time I had already used the quit claim deeds from Sowers and Shinn to pay the delinquent property taxes and pull the property out of tax foreclosure.  I had also cruised the land and located my logger.  Since Daugherty had abandoned the place to the IRS, the Dept. of Revenue, Employment Security, and county tax foreclosure, and since Kendrick was dead and wouldn't miss either the timber or the unpaid amounts on the Real Estate Contract, I became a "Timber Man". 

But Kendrick wasn't dead.  He was busy changing his life and had cut off ties with all his old acquaintances.  He showed up eventually, demanded and was paid most the profits from the timber sale.  Instead of getting a warranty deed from Kendrick, I asked him to assign his contract to me.  He was the senior lien holder.  We then foreclosed against everyone else.  I almost made an exception for my good buddies at the IRS, but my attorney advised against it. 

Sold the property that year.  My wife (in spirit but not by law -I'll not invite the state into my personal life) wouldn't let me keep it.  She allows no rivals.  Judging from the time I spent "out at the property" she was beginning to think she was only my second love.

@Joe B.,  -Hi Joe, thanks for the precautionary words.  It does seem to be the universal opinion of the BP community that there are a lot better ways to make money in Real Estate and that my plan to take possession of abandoned real estate will most likely to lead to serious law suits against me or even to criminal charges.  So your point (and everyone else’s) is well taken.  I don’t know if I’ll eventually decide to work abandoned properties, but I do think it is worthwhile to try reinventing the wheel if I can change that wheel to better serve my needs.

For what it’s worth, I was involved in a multi-year legal battle before I began acquiring real estate.  I believed I was right and put in tremendous effort.I used attorneys until I was out of money.  Then continued on my own despite advice from every professional to settle. In the end, the case was decided against me and it did take years to recover.  But after the suit was done, the knowledge and experience gained during the many depositions, motion hearings and trial, left me much less intimidated about lawsuits.  My opponent’s attorney said that he’d never sue me again, because he had never had to fight so hard, for so long, to gain so little (seemed like a lot to me though).  Now, long after it’s been over, I can say that experience has so grounded me as to have the opposite effect of making my blood pressure rise, when faced with a legal challenge.

In part that may be because, even if I was sued in this endeavor, the way I would acquire abandoned real estate, -through documenting the abandonment and assuming possession, would result in the business being largely judgment proof.  I wouldn’t need to actually own any of the properties, -ever.  My company(s) could manage dozens or even hundreds of properties without needing to take title.  The ability to manage properties quietly, unseen and unknown is exactly what attracts me to the idea.  If I manage many properties, but own none, who’s property can be seized to satisfy a judgment?  So what if I’m sued?  I could reply that I’m too busy with other matters and they should proceed without me.  Or I could appear in court just to relax, learn a thing or two, eat popcorn and watch the entertainment.   Just saying, that everyone else’s concern about lawsuits is not one that I share.

On the other hand, I am concerned about and committed to loving mercy, doing justly and walking humbly.  There is no desire in me to get ahead at the expense of someone else.  I do not covet what others own, and if I owe a person, I’ll do all in my power to satisfy that debt.

For now, I will certainly take time for review and reconsideration before proceeding with this business strategy.  By the way, I really like the "Why Bertolino" section of your home page.   Good photo, and statements of experience and specialization.  My thanks to you and to all our fellow BP members for your advice and comments.

@Bill Gulley, -Well Bill you probably summed up this interaction.

“I doubt we can ever see eye to eye on this plan, while [Davido] referring to it as ethical, much less legal.”

Seems to me that it’s a tough crowd here at Bigger Pockets?  I do appreciate the input.  BP posters certainly do not suffer fools lightly (nor should you).  However, I would feel a tad more welcome if this group wasn’t lightning fast with suspicion and accusation.  Of course it could be just my disappointment to have found no support from any real estate professional for an idea I was hoping to implement - possessing and profiting from abandoned real estate.

I understand that you’re likely to be done with my posts but I would like to respond to your comments. There are a good number of things that we do agree on and a few of your comments that I’m certain are wrong.  So, in order to better calibrate my moral compass for any future plans let’s see where we agree and disagree.

1. 1. “(W)e have abandoned properties down at the lakes. I can tell you that going on those properties is a great way to get shot!”  -This seems to be a suggestion that my judgment is off, rather than a flaw in my morals.  If that’s the point, you’re probably right.  Your mention of “the lakes” instantly peaked my interest.  Feisty people attract me too.  All right, -my judgment is lacking –I won’t count on a loan from you.  But peculiarity in my character is not in itself an ethical issue. So lets move on.

1. 2. “(C)laiming to be an agent of an owner as you mentioned above is fraud”  OK I agree with you!  The word agent can have very specific legal meaning especially in a contract. It was a bad choice, and one that I won't make again. Fraud was certainly not my intent but thank you for pointing it out. I am committed to not do that again. Instead, I may take the following approach with a prospective renter? "Mr Renter, this property belongs to Mr X. However, Mr X is absent from the property for an indefinite period of time. My company XYZ LLC is a lienholder and we are in possession of the property only until Mr X returns. Mr Renter, if and when Mr X returns, your ability to continue renting this property from us will terminate. Please sign here to acknowledge that you have read and understand that this rental is temporary and indefinite." If I use such terminology there is no claim of agency and no agency problem. The renter knows who owns the property so there should be no ethical problem. I feel better already. Don't you!
2. 3. “And an unrecorded deed is not effective to give possession or ownership rights as the interest has not been perfected.” -I think I know what you mean here, but since possession of property is my focus I should point out that only the second half of your statement is accurate.  The first half, is clearly wrong.  An unrecorded deed is more than effective to grant possession.  Even a verbal agreement is effective to grant possession.  I do agree that it is fair to point out that keeping possession, and defending a verbal agreement may be impossible, when not recorded.
3. 4. “(P)aying the taxes does not grant possession, you are trespassing.” Well Mr. Gulley, you are right that paying the taxes does not grant possession.  Paying the taxes can only prevent tax foreclosure and be used to create a lien.  It is the previous owner's abandonment that enables possession.  When a property is abandoned, no one is granted possession.  However, possession can in fact be assumed by anyone.  And despite the common perception, even here amongst real estate professionals, that assuming possession constitutes trespass -that is not the law in any of our 50 states. The definition of abandoned means it simply is not possible to trespass on such property.  Abandonment has been defined (in the common law) to include as an element that the own relinquished his rights. If the owner has not relinquished his rights, then his/her property is not abandoned.  Once the owner has relinquished his rights, who would I be trespassing against?  It seems to me that you are assuming either I will invariably be mistaken as to whether a property is abandoned or that abandonment must be expressly stated.  However, abandonment is recognized when it is de facto or implicit.  Most people are uncomfortable concluding an abandonment exists if it has not been expressed to them by the owner.  I understand that.  But are you trying to claim that it is just too difficult for me to determine whether a property is abandoned?  Or do you believe there is no such thing as abandoned real estate?  Or do you really believe it is trespass to assume possession of a property that has been abandoned?
4. 5. “What you propose is simply theft.” As a matter of law, this statement is simply erroneous.  Since the owner of record has abandoned his interest, there is nothing I can steal from the owner.  Since I took nothing from the lien holders (see 6 below), I can’t be stealing from them.  And since I’m giving my tenant’s everything I promised them, I am not stealing from the tenants.  Who in the world do you presume I’m stealing from?  Please cite even one law from any state?

  6. Your mention of other liens and mortgagees writing off a loan. What you suggest is mortgage stripping  -No sir.  Mortgage stripping is something that owners do.  I mere possessor couldn't strip a mortgage no matter how hard he tried.

1. 7. “Lenders are entitled to the rents as an offset to the mortgage … Now you’re entering the bank fraud arena.”   Bill, please clarify!  Is this a statement regarding how you believe it should be ethically or how you perceive the facts to be legally?  Mortgage holders are not entitled to the rents unless granted an order to that effect by a court under special pleadings.  If the mortgage is not paid as promised the mortgage holder is entitled to foreclose and take the property.  I think they should foreclose. Further, since my plan does not involve taking out loans from any bank, it should be completely clear to even a casual observer that I am nowhere near the arena of mortgage fraud.
2. 8. “Federal laws also cover interference with an insured institution's operations, your occupancy of their collateral is certainly an interference.” - You’re being a little hard on me here aren’t you Bill?  I’m sorry unless you clarify which statute you’re referring too, it is not possible to tell how the elements of an interference crime would apply, unless you're referring to this.

   “The result is that you're taking money derived from the property from the lender and clouding title with your ploy.”-Again, as a general rule lenders are not entitled to rents. Lenders are entitled to foreclose their lien, but I would do nothing to stand in their way.  My plan not only does nothing to hinder a foreclosure.  The steps I’m proposing would actually preserve and improve their security.  Is this idea that lenders are entitled to collect rents from properties that they choose not to foreclose one of your own personal ethics?  Is that why you claim,  “you're … clouding title with your ploy.”  -Even if this statement were true, I am focusing only on abandoned property.  They can be abandoned only if the owner has relinquished his rights, in which case there can be no harm in clouding the title.  However, to state I'm clouding the title presumes too much!  By assuming possession of an abandoned property I’m neither making, nor recording any claim on the title.  My goal is actually to avoid recording title claims.  In Washington, until seven years pass no such claim can even be recognized. A mere possessor in no way clouds the title.

1. 9. “I'd also say cutting timber from another's property will land you in jail …that’s grand theft. –Agreed! -unless of course the accused can show by clear evidence that the element of intent was missing.  You have no rights at all from the position of holding any tax lien to possession or in taking the fruits of ownership.”-Agreed again.  It is not having a tax lien that grants possession or permits taking the fruits of ownership, rather it is the previous owner’s abandonment of a property that permits both.  Without abandonment, you’d be right in most respects.  However, once abandonment can be established, a lot changes.

1. 10. “Seems you mentioned the business model offering "privacy" most thieves usually don't want to make known their escapades,…”The suggestion that people who try to preserve their privacy must have something to hide, is flawed. I’ll bet the next time you make love it will be in private, but no one should take your desire for privacy as an indication that you’re ashamed of your escapades.  It is true that I’m seeking extraordinary privacy.  Must be my faulty judgment again but I foresee extraordinary danger ahead from some very bad people.  Unfortunately, they have control of our government.

Bill Gulley,  thanks again for sharing your thoughts.  For what its worth, I am deeply cautioned by the realization that those of you who know Real Estate so well found nothing worthwhile in my plan.  And worse, found it dangerous, unlawful and unethical.   I don't agree, but your comments have me reconsidering much.

I did work abandoned properties a decade ago in a bit different manner than I'm now contemplating and for different reasons.  I quit about 2007, but I have been thinking about going back to this area of real estate ever since.  Best to you.

@BillGulley,  -Bill thank you so very much for your comments. Just what I need.  There is much to agree with and few things that I believe are flat wrong because they start with the wrong premise.  Today's a work day and I'm already late so will respond later.  Thanks again.