All Forum Posts by: Tom Gimer

Do you think some company that advertised sub-to "insurance" then later walked that back and can't even maintain a valid SSL certificate on their website is going to keep your loan terms in place?

@Account Closed I responded in the original thread about your performance deed questions:

https://www.biggerpockets.com/forums/311/topics/1143288-is-t...

@Peter Walther I agree that performance deeds create major title, insurability, liability, etc. problems but when a subject-to buyer does default, having that option would make me as a seller MUCH more comfortable when deciding to resume making payments on the mortgage. 

While in the process of being screwed having a bad option is better than no options at all.

Performance deed as in a pocket quitclaim deed back to the seller, to be held in escrow until default.

I've mentioned before how these cause title problems, potential litigation, etc. but doing so would certainly work to put the seller back in title. Most buyers/sellers agree that in the event of a buyer default the buyer will reconvey via DIL (if the seller has a lien to foreclose) or otherwise. Either one of these options is coming with some costs... and if the buyer has defaulted guess who is paying those.

I think as a seller I'd rather have the deed than be forced to chase down the defaulting buyer for ink.

To me it sounds like the recording was submitted electronically:

County rejected the POA for seal not being clear

Title company A should not have closed the A-->B deal without a valid, original POA in hand. That's the standard where we do business anyway. While a scan or fax of the POA may be reviewed for substance in preparing for closing, the original gets brought to title before or at the closing. The lack of an original POA -- not sure if that is the case here -- should have prevented the A-->B deal from closing at all. And then of course that should have derailed the B-->C.

It's things like this that make me think a double closing cannot be 100% perfected between 2 different title companies. Ask a transactional lender whether they are comfortable with that setup!

If there is or was no valid POA and the principal is now dead, the PR of his/her estate can confirm the prior transaction via confirmatory deed and all will be resolved... in a perfect world of course.

As a preliminary matter, why would a buyer make an EMD on a contract that contains a material (price) error? Presumably there is correspondence supporting the 235k. I would go down that road first.

The contract itself would spell out the various liabilities and remedies in the event of default… but given the above issue can there even be a default declared? If I was in this situation I would consult with broker first, then attorney.

Deed of trust and note are executed at the same time -- before any money is disbursed from escrow. The problem in this scenario is the borrower(s) may not want to sign anything else. The deal you have may be the deal they made.

@Wayne Brooks Here's my take on this... there is no "nightmare". Stop losing sleep. Nobody is collecting any $ from either title insurer or anybody else for that matter (unless there is some fraud involved). This POA problem -- a document affecting title not properly created, executed, witnessed, sealed, acknowledged, notarized, or delivered -- or some similar definition in the policy form at issue, is a covered risk. Everything is gonna work itself out.

The A-->B deed recordation (albeit late) fixes the chain issue due to the doctrine of after-acquired title.

So here's what happens next. Since the insured buyer is trying to resell, the title insurer on the B-->C transfer will step up and insure the next transfer while the POA recording issue gets resolved. @Peter Walther I think would be a good resource for more info as to how things like this work out.

With only a Note you would need to obtain a judgment against the borrower in order to pursue other assets (if any actually exist). And, if the borrower files BK before you obtain that judgment, that $52k goes poof.

That's why you always need to record a proper security interest (mortgage/deed of trust) against the real estate. A mortgage lien would not be affected by a subsequent BK.

Shocking fact pattern. Hope it works out.

@Joseph Hernandez The cost of a double close depends upon the purchase price. The title company will likely reduce fees on the A-->B deal but the recording fees and transfer and recordation taxes (or whatever the local charges are to record a deed) are what they are.

Yes, you can utilize a blind HUD with either hard or private money.

@Brian Batista You're going to need to find a title company that is ignorant of of FHA policy.

If a title company handles a subto of an FHA loan without qualifying the end buyer under FHA regs, the title company could be forever blackballed from closing federally insured loans. There is published guidance on this which I have previously posted to BP.