All Forum Posts by: Shannon Wright

A title claim is the way to go to make it go away, maybe. Do you have your owners title policy? I am in Temecula, I would love to sort this out and close the deal for you and ownership challenges are my specialty. What title and escrow company did you close with on your purchase? I used to be a title officer so I might be able to get some info on it, too.

HERO loans are rolled into the taxes and they can be rolled over to your buyer, also, FYI. It doesn't have to be paid off if it is truly a tax-rolled HERO. Being that they are usually rolled into the taxes, the prior title and escrow may have assumed (doesn't make it right, but it happens) that you were willing to leave it on the taxes.  

I suggest doing a bond around it. A premium is paid to an insurance company and if the lien ever comes back to life by the MIA person, then the insurance will pay it as a claim and done deal. Seller and Buyer are hands off and you get clear title, too. 

We use JR Olson Bonds in Cali, not sure if they service your area. 

Good luck @Ernesto Corona!

What I think of here is that the seller is older and may not be savvy and is taking what they can get, maybe out of desperation and maybe not. Then, some family member gets wind of the sale (after closing), thinks they got juked out fof big money (whether appropriate or not) and then they pull the fraud and ELDER ABUSE card out and there are judges that will unwind an entire deal for elder abuse and CPS gets involved and it's ugly. I have had 2 diff sellers pull that card after my investor closed escrow. It's a headache for everyone involved and it has changed how we handle elderly sellers on investor deals. 

For what it's worth, the largest spread I have ever closed on was a $200k assignment fee (to a daisy chaaaaiiiinn) and the buyer's exit price was $400k-ish with about $150k in profit after rehab and selling costs. If a party gives informed consent, then the deal is good...IMO. 

I am in Cali but I have closed C-A deals with REO as party A, when the REO is Ocwen/Altisource. Not sure what out of state rules are, but I can do it if you ever have a Cali need. :)

Do you have a developer already? I'd love to help you close the escrow! 

@Jason Clark, I am not an agent, but in my experience, you can cancel for Buyer non-performance, but you have to issue a Notice to Buyer to Perform and a Demand to Close Escrow would be a good idea, too. The buyer failing to "meet" these demands will give you the right to cancel and potentially keep the EMD, depending on the contract terms and contingencies. Make sure to let escrow know your desire to cancel so they can act accordingly and not incur any costs and such on your behalf. You want all relevant professionals on notice if your intent.

14.D. on the residential CAR contract sets out your rights to cancel as a seller. You might want to read 14.H., as well. :)

Good luck!

@John Teachout you do NOT have to pay off the loans to get title insurance. If you want "clear title" then you would but I do Sub2 and AITDs often enough to know that they are easily possible if all parties agree.

There is a deed recorded and the buyer does become the title holder in these transactions, too. The largest issue is the seller using the money to pay the existing mortgage (which is why I suggest using a loan servicer to ensure this is done) and the possibility of the existing lender finding out about the transfer and calling the loan due under the Due on Sale Clause. 99.9% of the time the lender doesn't call the loan due because they don't care as long as the mortgage gets paid on time and no issues arise.

I would specify in writing how the principal reduction is handled and applied. In an AITD situation, funds go to the existing/underlying loan AND the seller for the equity payment. So, I would be of the position that payments are allocated in a way that pays down the principal of both parties, the actual loan and the seller equity payment at the same time.

For example, the existing mortgage payment is $1,000 a month and you are paying $1,500 a month, which means the seller gets a $500 monthly equity payment. You decide/agree to pay $2,500 a month, which is $1,000 over what is minimally "required". I would indicate in writing that $750 (of the additional payment) goes to the underlying loan and $250 goes towards the seller's equity payment. This way you are paying both down and truly maximizing the principal reduction payments. Only paying the seller will leave the underlying loan in the same place and only paying the loan leaves the seller "loan" in the same place. 

Also, if you send the underlying loan any additional funds, they almost always apply it towards interest first instead of principal. So, if you are ever sending in extra funds, it HAS to be specifically noted that the money has to be applied as a principal reduction or they will not do that and that doesn't help you at all.

Everyone above is accurate but I would also add in the loan contingency. Have your lender confirm "denial" of the loan or provide conditions of the loan based on the repairs needed, etc. If you have a loan contingency that you cannot remove because you can't get a loan due to the property condition, then you have another reason supporting your cancellation request. 

Section 11.B. on the CAR contract states that you can elect to Cancel **OR** request repairs be made. You have the absolute right to choose to cancel without requesting any repairs.

Section 12.B. says you can remove the contingency **OR** cancel.

As an Escrow Manager, I suggest you also email escrow (including your agent, lender, etc) and give them written notice of your intent to cancel and request for the return of the EMD so that they stop working on the file and you don't get any cancellation fees or hard costs incurred that you will need to reimburse. It will also commemorate your desire to cancel to all the professionals involved. 

You should also read 14.H. of the CAR Contract, it might give you some alternate ideas to push for what you want done.

This seems pretty straight forward, good luck!