All Forum Posts by: Justin Garrett

Update: I found a lawyer who stated I had a solid case to bring against the seller. Again this isn't how I wanted to handle this. I had sent the seller an email stating I wanted it handled at the lowest possible level; however, he felt otherwise. The lawyer conducted calls with my will real estate agent and the bank's vice president who held the properties' loan. They then drafted a letter stating the properties needed to be paid off or take legal action, and four days later, I received a letter from the seller's lawyer stating the loan was paid off. This was followed by an email from the seller saying he wanted all future conversations to be at the lowest possible level.

Thank you, everyone, for your help and guidance in this situation.

@Wayne Brooks Thank you for the feedback. The "wrap around" mortgage is what tried to have completed once it was found that the seller had the loan on the property but the seller refused. He then stated he had paid it off the mortgage before closing. I also went back through the commercial real estate contract and found the below. There was no mention of liens on the property in the agreement.

19. DELIVERY OF THE DEED:

A. On or before the Closing Date, SELLER shall execute and deliver a warranty deed and all other documents and funds reasonably necessary to complete the closing of this Contract. The warranty deed shall convey a marketable fee simple title to the Property free and clear of all liens and encumbrances to the BUYER, except as provided otherwise in this Contract.

Hello,

In a bind here looking on getting other's thoughts, and maybe an excellent Real Estate lawyer in Kansas.

I will start with a bit of backstory. I found some apartments while at home in Kansas on leave. I am currently stationed overseas in Europe. The properties were a value add and need a lot of work to ensure they were up to what I would call suitable standards (something I would want to live in). I negotiated with the seller to do an owner financing with 10% down, and the owner carries the note for 20 years at a 4.5% interest with a balloon at ten years. Long story short, I purchased 25 units last month with owner financing. Unfortunately, during our financing agreement, the owner never disclosed he held a mortgage on the property.

However, when the title company conducted its search, they found a loan on the property. I requested that the bank make the loan assumable, and if the seller defaulted, I would assume the loan and no longer be legally required to fulfill my agreement with him. However, he denied so I stated I would not purchase without the loan being paid off. As I am overseas, I was not as closing, and the original ALTA commitment from the title company under the requirements stated the loan would be released. However, the title company, by the direction of the seller or seller's agent, had this ALTA document altered the day before closing to have the loan placed on the exception page. My broker and transaction agent were told at closing by the seller that the loan was paid off in full. I come to find out yesterday the seller has not paid off his loan. I know some of this is on me because it did end up on the paperwork from the title company as an exception and did not need to be released; however, again, I wasn't at closing, and the seller verbally stated he had paid the loan off. My broker has contacted the bank, and the loan was confirmed not paid (yes, he should have done that before closing).

My question is, what happens if he defaults on the loan that is not assumable and I now have equitable interest in the properties?

If he were to get foreclosed on would I still be required to continue to pay in the agreed on portion of the our owner financing on the properties?

@Gino Barbaro

I would love to be able to take you up on that offer, but I am moving to Europe for my next duty station in March but I will continue to follow Jake & Gino over seas to stay motivated and in the game! Keep up the knowledge push to the masses you are taken people to the next level.

@Gino Barbaro Thanks for the congrats this property is in my portfolio because of you!  I learned about creative financing from your podcast.  I wouldn't have taken this deal down with out the knowledge you and jack put out so I owe y'all a thank you.  I hope to be at the App Folio level with in the next few years. 

Thanks again for the knowledge y'all are producing. 

Justin

@Doug Van Liew I am in a small town with this properties my fear is that the renters in this town won't utilize the online services because they are familiar with it.  I think i could stream line the collection and tracking process a lot though. If I can land some more units I will need to expand in to a software to help me manage from over seas. 

Jay Helms I have made an excel spreadsheet that I am using now. I found the property just by letting others know what my goals were and what I was looking for. The owner only asked three people if they wanted to purchase it and luckily one of them was my manager and he new I was in the market for an apartment. Like they say in the podcast a lot let every day one know what you are doing and what you are looking for. When they come across it you’ll be the first one they think of!

Leann W. Yes I do currently live in Virginia Beach right now. I grew up in the town I buy my property in. I got seller financing with these 16 units. I am on the hunt for more units right now so I hope we both are able to find a deal so we can’t continue down that road to financial freedom!!

Filipe Pereira I am not really worried about them being local because I will be going over seas for the military for a while.

Hello, I am just reaching out to see if any one has recommendations on CPA. I have sold two properties and bought two one with seller financing. Thanks for the help Justin