Any Real Estate Lawyers here? What are the possible outcomes of this?

Bit of an interesting situation here, and I’m curious if anyone has any similar experiences. Before I go into anything, let me be clear, if anything moves forward with this there will be a real estate lawyer playing along. Now, I'll try to keep the story short and as much to the facts as we can.

My dad would like to buy a house. The seller would like to sell the house. • My Dad would like to buy a house
• The seller would like to sell the house
• While not the only place available, this is far and away the best situation for my parents.
• It has about 9 garage spots!
• My dad could probably pay cash for at least 80% of this, and if not 100%, his current house will be paid off in a month or two and he could get a HELOC sufficient to cover what he can’t cover in cash. He also has a paid-for parcel of land worth about ¾ of the value of this property that will be put up for sale as soon as he buys this next property, whether it is this house or a different one. Basically, if it needs to be a cash deal with no mortgage, that is fine.
• The property was foreclosed upon a few years ago.
• There was supposedly a settlement.
• There are at least 3 lawsuits regarding this property: Owner vs. Fannie Mae, Owner vs. Mortgage company, and Owner vs. Judge. At least two of these have been thrown out.
• The owner has the deed in his safe deposit box. I don’t know about the title (and struggle with the difference).
• This was supposed to go to a Sheriff’s sale a while ago. Either this did not happen because of the lawsuits, or it did happen and the mortgage company bought it for $1.

We're trying to figure out, what are the possible outcomes of this? As far as we can tell, it basically boils down to one of 3:
• The seller owns the house outright and can sell once the dust settles
• The seller owns the house, but still owes on it
• The seller is SOL and the company owns it and it will need to go to a Sheriff sale.

Are there any other outcomes that it could possibly be? Dad would really like to just write a check and buy the place (and pay off any remaining balance on any loans), but it seems like this is going to be mired in legal battles for the next few years.

Owner vs Judge???????

I have bought and sold two homes. I am not a lawyer and have no legal grounds to say any of the following.

Isn't this what title insurance is for?

Flight Service wrote: Owner vs Judge??????? I have bought and sold two homes. I am not a lawyer and have no legal grounds to say any of the following. Isn't this what title insurance is for?

Apparently the judge messed up a procedural thing. That case was thrown out immediately.

It sounds to me that he is a squatter on the land and that deed is null and void.

The interesting question is why does he have a foreclosure pending if he said he has the deed? Did he refinance the property at some point? There are a few pieces missing here to really know what the outcome would be. It really depends on the settlement results that you mention in line 6 and the whole story behind the foreclosure. There are a few key pieces missing here to really make a statement.

My unprofessional opinion

Oh, forgot to mention: One of the garages has a heated floor.

The way I am reading this, the document that the seller is referring to as the "deed" is probably the security instrument, the document that lays out the terms and conditions of the mortgage. My thought here is that there's not going to be a way to cut the mortgage company out of this deal - either they are going to have to approve the sale of the property (which may or may not satisfy the existing mortgage, if not, expect more pain), or you are going to be buying it from them.

Holding a paper deed and holding legal title to the property can be very different things. A title search through a reputable company that does such things should turn up what's going on.
There is a very real possibility that giving the current 'owner' a pile of money wouldn't result in the legal possession of the house.

Is the house listed with a realtor?

Is this a case of the seller claiming that he owns the house free/clear but that seller can not prove it?

It's bad getting your legal advice online. It's worse getting it online from a carpenter.

I am a carpenter.

Now that you know where you stand, I don't think the owner owns it anymore. The deed in his safe deposit box is worthless paper if the property has been foreclosed and a separate deed (or lien) has been filed with the Clerk of Records.

I also don't think there is any difference between a deed and a title- they are the same thing.

The pending Sheriff's sale will not transfer ownership from the "owner". He's a squatter- the bank owns it. The Sheriff's sale will be on behalf of the bank.

If your Dad wants it, he will have to buy it from the bank, then worry about getting rid of the squatter in his property.

Bad deal. Move on.

Mazdeuce did a better job than me on the "deed vs title" thing.

But I still say his "deed" is completely worthless. The "owner" does not hold title- he's not the owner.

JohnRW1621 wrote: Is the house listed with a realtor? Is this a case of the seller claiming that he owns the house free/clear but that seller can not prove it?

SVreX wrote: It's bad getting your legal advice online. It's worse getting it online from a carpenter. I am a carpenter. Now that you know where you stand, I don't think the owner owns it anymore. The deed in his safe deposit box is worthless paper if the property has been foreclosed and a separate deed (or lien) has been filed with the Clerk of Records. I also don't think there is any difference between a deed and a title- they are the same thing. The pending Sheriff's sale will not transfer ownership from the "owner". He's a squatter- the bank owns it. The Sheriff's sale will be on behalf of the bank. If your Dad wants it, he will have to buy it from the bank, then worry about getting rid of the squatter in his property. Bad deal. Move on.

A few things:
This is not listed with a realtor. The guy knew Dad was interested in buying in this area, and reached out to him.
Dad will be consulting a real live lawyer. I just like hearing the thoughts of this crowd.
The "owner" isn't a squatter. He doesn't live there anymore, and there aren't any appliances in there either.
Moving on is a distinct possibility. But if possible to buy, this is a much better house/property/location than any of the others available.

SVreX wrote: But I still say his "deed" is completely worthless. The "owner" does not hold title- he's not the owner.

I tend to agree with you from what I have found out reading through the court documents that I can find.

He doesn't have to live there to be a squatter.

He is squatting by claiming ownership to something he does not own.

this is a big enough financial decision to hire an actual real-estate atty...

On the topic of title insurance, I'm not actually sure if that protects the owner, or just the bank making a loan for purchase on a property. Something to check. You also might well not be able to get title insurance if there's a lawsuit outstanding like that.

My guess would be that the seller is SOL unless the foreclosure was invalid. There have been cases of banks foreclosing on houses that they don't actually have the right to foreclose on, and it's theoretically possible that's what's going on here. It's probably more likely that the guy living in the house is in the wrong and is just being a PITA to the bank, though.

Personally, I wouldn't touch it with a 10 foot pole while there are pending lawsuits contesting ownership of the property. There are lots of houses out there and even if this one is "perfect" in every other way the suit sounds like a giant headache at best.

Datsun1500 wrote: What do the public property records say?

"VERIFIED VALID PROOF OF OWNERSHIP"

What does that mean?

Are you reading something online? Tax assessor records?

Those won't help you. Actual public records, paper filed at the courthouse.

Online records have a delay of up to a year, and the Tax Assessor is not the Clerk of Records.

SVreX wrote: What does that mean? Are you reading something online? Tax assessor records? Those won't help you. Actual public records, paper filed at the courthouse. Online records have a delay of up to a year, and the Tax Assessor is not the Clerk of Records.

No idea what it means. It was from about a month ago.

I meant what does your comment mean?

Where did the info come from?

SVreX wrote: I meant what does your comment mean? Where did the info come from?

It is from the website for the county clerk. That is the description of the adobe file that it looks like we have to buy. I'll point Dad to that direction; maybe that will give us some cold-hard facts.

Hmmm...

Possession of a "deed" isn't the same as owning the property. What matters is what is recorded in the county records. What the owner has is probably the original deed that has been recorded-- the county doesn't typically keep those after a copy has been recorded. That deed will likely show the lien that the mortgage company has placed on it. The "owner's" ownership is subject to the mortgage. The bank or mortgage company doesn't own the property until after they prove default on the mortgage and the foreclosure process is complete. The foreclosure process isn't complete until the property is sold at a foreclosure sale. Typically, the mortgage company bids the amount of their lien. If there are no higher bidders, the mortgage company owns it for that amount.

If the foreclosure process isn't complete, then the owner is still the owner subject to the mortgage company's lien. In that case, it is still possible to negotiate with the owner to buy the property. However, if he decides to sell it to your father, he will also have to negotiate a settlement with the mortgage company, who will likely want their loan repaid along with a lot of lawyer's fees, back interest at a default rate, and a bunch of fees. If the owner is as litigious as it appears, I think it unlikely he will be able to come to an agreement with the mortgage company. If the mortgage company is happy with the settlement, they will give a quit claim and clean title and title insurance are then possible. Sometimes a mortgage company will foreclose just to be rid of a troublesome owner. More often than not, they will try a short sale with the owner's cooperation first, though in the past few years the mortgage companies were drinking from a fire hose and didn't have the resources for such things.

The above is something of a simplification of the process and laws and procedures where the property is located can vary widely, such that much of the above may not be accurate for that location. There are few areas of law that diverge amongst states, counties, and municipalities as much as those dealing with real estate.

I'm not a lawyer, but a financial professional that has dealt with real estate for decades.

my advise?

talk to the guy, check public records, whatever, find out who actually owns the house. Get a lawyer to go tell the guy that actually owns the house (probably a bank) your offer (assume you cannot inspect the buildings so therefore they all need a lot of work in your offer) as soon as they clear up whatever mess with the guy living there is.

Give your offer in writing and make sure it has an expiration date (and other clauses, such as condition). Watch the bank do all the hard work for you.

If the seller is the private individual who claims he owns it, he probably doesn't. It likely belongs to a bank or mortgage company. You could contact the sheriffs dept and see if they can clear it up. But you are really going to need an attorney.

I think it most likely belongs to the lending institution, meaning legally the 'owner' cannot transfer title (ownership) of the property. If your dad hands this guy $xxxxxxx then he's probably going to disappear and leave your dad to deal with a worthless piece of paper and a lending institution that wants some $$$$$$.

If you think it's a good deal, go back to the courthouse, find out what lender is involved then contact them directly. Cut this other guy out entirely. On that: if the guy owes, say, $80k, you give the lienholder, say, $110k for the property then the 'owner' will receive whatever is left of the $110k after the bank gets their $80k and all the various costs are paid so he won't necessarily be left empty handed. But right now I get a strong sniff that he's wanting the whole enchilada, ya know?