Case Study: House with Liens

 

 

 

 

 

I came across photos of a house we bought and renovated way back in 2002.  The people we bought the house from had a unique situation and we wanted to share it with you.

This home had been in the family a very long time.  The mother who lived in the home was getting up there in age and was moving either in with her kids, to assisted living or a nursing home.  Not really sure where she was going.

They wanted to sell the home to raise funds to help fund her life over the next few years and because no one really wanted to live in it or take care of it and it really did need someone to give it some love.  We went and took a look at the house and talk to them.  They had had another investor who wanted to buy it, who gave up when they tried to proceed and found an lien against the property.

Sometime in the past the mother and father had needed money for something.  Not sure at this point what the loan was for, probably a home repair or maybe funding to send a kid to college.  What ever it was, the loan had been made by a private person, not a bank or a company or an institution.  And to secure his loan, he had filed a deed of trust against this property.

The plan at the time I am sure was to make the loan and secure it with the house.  Once the loan was paid off the lien or deed of trust was to be released.  But life happened and once the loan was paid off, no one ever released the lien.  And along the way the lender had either died or just totally disappeared, so there was no way to get the loan released.

So at this point, anyone who was going to buy this house was going to have to buy it and accept it with a lien against the property because there was no easy way to get it released.  The other investor gave up because he or she did not want a house with a clouded title and did not know how to clean this up.

We stepped in and negotiated a purchase price for the home that the sellers were willing to accept.

We wrote up a contract to purchase the home and put a closing date out about 3 months from current.

We then hired an attorney who filed a quiet title suit that is basically a court proceeding where the attorney and the court file legal documents to the effect of “if you own this lien and want to get paid, please step forward, and if you don’t step forward in a certain amount of time, the lien will be released and you can’t do anything about it after the fact.”  The attorney then published this in legal papers and send registered mail to the lien holders last know address.

After about 45 days, no one stepped forward wanting paid, so the court legally removed the lien and we were then able to buy this house.  We were not quite able to buy it in a week, but we were able to solve the sellers problem of a clouded title so they could sell the house to us.

If you are trying to sell a house in the Kansas City metro and you have deeds of trusts, mortgages or other items filed against your property, I would first reach out to a title company in town to see if they could run a title report, just to see all the issues and then ask them for some solutions to clean up the issues.  Sometimes they could be cleaned up with just a little leg work and research on the part of the seller and sometimes an attorney might need to be hired to solve the problem.

Other times there are things filed against the property that can be paid out of the proceeds of the sale.  For example we often talk to sellers who have one or two years of unpaid taxes.  They mistakenly believe that because they don’t have the money to pay the taxes, that they can’t sell the house, when in fact, the taxes would be paid out of the money we pay them for the house.

For example – we want to pay $80,000 for a house.  The seller wants to sell the house, but owes $5,000 in back taxes and $20,000 to a bank on a loan.  They don’t have $25,000 to pay the back taxes and the loan so they don’t think they can sell.  In this scenario we would go to closing at a title company and wire the title company $80,000.  The title company would take $5,000 and pay off the taxes and get a release of lien and then take $20,000 and pay off the bank loan and get a release of that lien.  The home seller would end up with $55,000, all the liens would be paid and we get the house.

We would love to help you sell your house, please submit the property to us online or give us a call at 816-800-9044.  Be sure to tell us all the issues that need to be resolved so we can put our thinking caps on and find a way for us to buy your house.

 

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