All Forum Posts by: Account Closed

Quote from @Account Closed:

@Ken M. thank you for clarifying, and for time you've put in to answering my post.

state: Colorado

deed type: warranty deed

verification: Yes I verified the seller.  I assume you meant check their ID, and do my own research on the title that shows the person I met with was indeed the owner.

distressed status: I didn't say it was 'distressed.' However, it is in default, wth a sale date in 3 months.

title status: title search and report is in progress. I'm planning to file it as soon as I see clear title, get an inspection, and get some additional paperwork signed with the seller.

should I file the deed?: people have commented on this post very strongly both directions on this question - some say I definitely should and some say I shouldn't.  Sounds like you're more hesitant, and that I shouldn't.  Your quote from above sounds like good advice, and makes me want to proceed more cautiously: "If he files, he assumes the risk of anything attached to title. Usually a foreclosure title has other issues."

Thank you again.
 

In some states, it's against the law to approach anyone missing payments, they are considered to be "distressed" If they have received a Notice of Default or a Notice of Foreclosure, they are classified "for sure" as distressed 
(federal issues)

In Washington, Oregon, California "for sure" it's a very big deal. I'm not current on Colorado foreclosure law. 

there are federal laws involved 

I personally, would not rely on self review of title obligations 

Warranty deeds have to meet state specific requirements, usually have to be notarized and when done outside of escrow create a "credibility" problem with future title companies and definitely with the court in a lawsuit

Regardless of what you have been told or have read, you can not simply "Quit Claim Back" a property.

and other issues

I would not admit anything further because these sites are monitored

pay for a local attorney for a proper solution He will need to see all paperwork to figure out best options 

or simply hope your seller doesn't come back later

I don't mean to be condescending here, but based on your question I think you're probably not ready to be purchasing property.  It appears you don't have a basic understanding of the laws regarding conveyancing and how the priority of interests is established.  You don't mention what state the property is in, but generally, if your deed is not properly recorded, your interest, whatever it may be, may be subject to being subordinated to any interest which is created after your deed.  I'm not referring to the existing mortgage you took subject to, but one made by your seller after he gave you your deed or subject to any deed he gave to another buyer after yours.  It might also be subject to any suit involving the property or any judgment against your seller.  Also, I hope you're not holding your breath waiting for a payoff, generally a lender will only deal with the borrower or his legal representative.

@Account Closed cure the default immediately if you got the deed.  Yes, you should file asap or you really have nothing (anyone can file before you) - Cure!!! 

Also having the deed recorded or not has nothing to do with your tax situation. Whether you file or not you own it and have a tax liability when it sells. 

Why would you need to quit claim the deed back to the seller?  Wasn't this a good deal?  I have a saying when i am teaching about subject tos:  "If you can't make it, Don't take it".  i mean if you can't make their payment to keep this property on track financially then you should not be getting the deed from the seller.  It is not the best ethical way to do this business.  If you don't have the money to cure, or it's not a good deal, then go back and give it back to them.  If it is a good deal then get it cured and keep it on track.  I hope this helps. 

Wow, what a sad story.  Cart before the horse?

@Account Closed,  Most folks think education is expensive.  The reality is that the cost of being uneducated is much greater. 

Going forward, know what to do and when to do it BEFORE you act upon a 'great deal' you might have stumbled upon.  

Listen to the insightful comments by @Ned Carey and @Ken M. and get your ducks in a row.  Just chalk this experience up to life tuition.

@Account Closed What I am about to say is not to criticize you but to help you and especially others reading along understand the issues better.  I write this because of @Ken M.'s post immediately above

It appears you got the deed, without going through a title company or doing a title search. This would be the second step.  The first step is a contract crafted to protect you and outline the responsibilities of both buyer and seller and describe the condition of the title you are acquiring. Getting the deed is the third step. 

Are you aware that there could be many debts tied to the property other than the mortgage or that even show up in the land records? There could be a second mortgage, judgements, property tax liens, IRS liens, state tax liens and other miscellaneous liens. Also the owner could be in Bankruptcy. Just because the seller didn't tell you about these does not mean they are not there. 

Who created the deed? What kind of deed is it? is it even legal? All of these things could be very serious issues for both you and the seller. They could also prevent you from wholesaling the property.

I'm curious where you learned to do a "subject to" deal. Whoever taught you left out a lot of important information. Good luck

Quote from @Account Closed:

I purchase a property recently subject-to, and got the deed to the property.  I'm planning to hold it long term. 

Though I have the deed, I'm wondering if I should go ahead and 'file it' with the county.  I haven't cured the default on the mortgage yet (it was 6 months behind, and in default).  

I have considered just wholesaling the property as well.  

Are there reasons I would NOT want to file the deed?  My thought is that having too many properties in my name could be a problem.  And/or that having the property change hands too rapidly (I file the deed in my name, then sell it soon after) could create various kinds of problems.

Also if I file the deed, then need to Quit Claim the property back to the seller, could that create weird title issues that creates a liability for myself and/or the original seller?

Thank you very much for your help!

This is not easy to explain in a site that is primarily dominated by anti-Sub2 posters to start with. Read the audience. You're not going to get much help unless you pay for training and I suppose that is an option.

Also your original post was contradicting. You’re saying you’re going to keep it long-term and then you’re talking about whole selling the property. You left a lot of details out so some of the posters are assuming you didn’t even get the proper paperwork to ask for a payoff from the lender. Maybe you can comment on that. 

It appears  Ken M offers sub2 training. Maybe you should talk to him about it. I’m not familiar with what he has to offer, but if it’s one on one, it’s probably better than getting into some overcrowded Facebook group that’s dominated by newbies. 

@Account Closed so you got a deed but didn't do a settlement and get title insurance? Do you even know what other debts might be attached to the property?  

Why haven't you brought the mortgage current if you are planning to hold for the long run?

Good question, Mark. With a properly structured subject-to, you generally shouldn’t need the seller to come back later if everything is signed upfront. The big risk is when paperwork isn’t buttoned up at closing. A few ways I’ve seen people protect themselves:

• Get a limited power of attorney from the seller at closing so you can sign anything related to the mortgage if something pops up.
• Make sure the deed is fully transferred and recorded right away so you control title.
• Use a performance deed / land trust / escrowed docs depending on your state, so you’re not chasing signatures years later.

I’m in Utah and we see a few subject-to deals here, and the investors who run into problems are almost always the ones who skipped one of those steps. Curious what others are doing in their markets to keep it clean?