Can I Lose This House To An Option??
Here is what happened.
Got a call from a preforeclosure. She said she wanted to get help. I met with her, listened to her situation, estimated her house repairs, and she wanted out of the foreclosure but not to get evicted, and with some cash for her house.
She signed the house over to me with a warranty deed to trustee. I promised to give her $5,000.00.
She had told me of other investors. One didn't want the repair headache, and another wanted to buy her house, but only give her $3,000.00. This one has been calling and coming over, and threatening her.
The day after signing I recorded my deed and faxed the bank for a payoff figure. The seller calls me crying that the other investor that had been threatening her is still at it and said she had a purchase and sale contract with him. She said she only signed a paper that he told her was so he could call the mortgage company. I assumed it was an authorization to release. I had checked title and found nothing but her original deed.
The neighbors are angry at this investor, and she is terrified. Come to find out she had signed an option to purchase exclusive for 2 months.
This woman is in foreclosure and if he didn't buy of course would lose the house to the bank. NOT something I would do to the owner.
Anyway since I recorded my deed and he didn't record anything. Can he sue her and get the house?
Any info would be appreciated.
You don't indicate in your post when the owner signed an option agreement with the other guy. Was it before or after she signed the deed over to you?
At least in PA, I do not believe recording of an option has to be done in order to make it valid. The recording just serves to put people on notice. If she signed an option with this guy before signing over the deed to you, this guy could have a valid claim absent a showing of fraud, duress, etc. Either way, he could challenge your right to buy the property and her right to try to sell it to anyone other than him. Anybody can sue anybody. The real question is who's going to prevail?
Sunre,
This is a question for an attorney in your area.
However, depending on your state law you may have the better claim. The recording system is designed to prevent this type of thing, and this investor certainly made a mistake in not filing a memorandum of option at the courthouse.
Assuming you had no idea of this option, you may qualify as a bona fide purchaser for value (BFP), which means that you properly fulfilled all your duties and followed the law in your purchase scenario, and had no notice of the investor's claim on the property.
If this is the case, depending on whether your jurisdiction is a pure race, race-notice or notice state, you may win. For example, if your state is a "race" state, the first to record wins = you. If it is either of the other two, you would likely have to fight in court to prove you had no notice, which equals expenses.
It is probably worth your time to pay $200 for an hour or two of legal counsel to determine where you stand (assuming you really had no notice of the option). Let me know how it turns out.
I agree that you should consult an attorney. However, I believe it may not be as cut and dried as race, notice and record.
Well, the seller didn't have a copy of the option to purchase. She had asked him for a copy of what she signed and he said she didn't need one. So obviously I thought it was an authorization to release. She gave me his number so I called him. He was nasty right away. He wanted to know who I was, what did I think I was doing, etc. I told him the seller wanted to sell and I was buying the property, and please don't threaten her or call her ex-husband from 10 years ago anymore. That's when he told me he had an option to purchase. I said I didn't know that and had already filed the deed. He said he had already filed, but I didn't find it in my search.
Later that same day, the seller found an envelope in her door with a copy of the option dated 2/20 and two nasty threatening letters from both 3/3 and 3/4. He is threatening to sue her, and told her she had two days to get out.
You know you win some you lose some, but I have never resorted to threatening the seller or make the neighbors furious with knocking on their doors several times a week, or yelling at the seller in her yard. This person gives investors a bad reputation.
And just because he is the way he is, I am not going to just walk away from this. I have contacted an attorney and duress is obvious. He also believes I will win with filing first.
Thanks for all you feed back!!!!
This fun should not include stress!?!?!
sunre,
please keep us posted on your progress!
good luck!
allcash
I just dont know. Obviously he didnt disclose all the details of this verbally. Or she wasnt listening. This sounds like an investor I wouldnt do business with. Disclouser is very important in real estate both verbally and in writting. Takes all kinds if she had a better offer he ought to be a man about it most investors I know deal this way.
On a practical level he can try to sue her (not you) and will likely get nothing for the trouble.
As noted, his option might be void as he did not record it and a later document has been recorded.
If the option wa not notorized it might not be valid. This gets us back to the idea that she could get an opinion from a lawyer.
Largely you should stay out of the situation as you are not really involved. Proceed with the deal and take care of the lady. She can call the police if he keeps making threats. She is broke so sooner or later he will figure that he needs to fade away.
Keep doing things ethically and you will be OK. She will be OK once you get her out from under the foreclosure.
Good luck.
John
If this investor continues to harass your seller have her file a police report and have get a restraining order against him. This guy is unethical and needs to be taught a lesson. I agree talk to an attorney who specializes in RE law.
He does need to be taught a lesson, and should not be doing business that way.
However, if this guy disclosed to the seller that she was signing a purchase option, it is not up to the investor to educate the seller that his option is exclusive, and that should she enter into contract with someone else, he could sue her because he had a legal option on the property.
But I doubt he disclosed that it was an option to her, because he did not even leave a copy for her. However, she could be senile and suffering from dementia, in which case, no contracts of ANY kind would be enforceable with her, due to not being of sound mind when signing.
If the guy is just angry (and of course out of line) because his option is not being honored, I can understand his feelings, however, he should go about things the legal way, and sue for performance of contract.
He should have filed a memo of option, but then again, he sounds like such a jerk that he deserves to not get this house, anyway. My best, Dave
Just an update.
The other investor has not filed anything.
The seller has not received any more calls or pounding on her door since 3/4.
I am going ahead with the purchase as the seller and I agreed.
If anything else develops I will let you know.
Thanks for all your comments. I also believe this investor should be taught a lesson. One bad apple shouldn't spoil the bushel.
Just an update:
The investor who threatened the seller was a birdog for an investor here who started and runs the local investment club. I have never gone to this club, but I have heard of him. Ironically, I sent my daughter to the last meeting, and behold, they were talking about this deal. They have said that they will sue the seller. My daughter said nothing, only listened.
The day after the meeting, the investor now, not the birdog, is calling and threatening the seller, and also has his attorney doing the same. She has since disconnected her phone, and doesn't care if they sue her.
I was in total shock to find out that the first guy was a birddog, and then WHO the investor was. Now I wonder if that is how he gets most of his deals. Anyway, the sale is mine, and I am distressed to know that this investor uses a birddog like this, and then endorses it. :-o