Short Sale Approved But Problem With Judgements
Recently I have had a SS approved for $80K, the FMV is $116K. Then the title search was completed and it came up that the seller owed $11K on his Child Support and $10K with NJ DMV. In order to buy the house with a clear title, I would owe $103K. Child Support and DMV will not negotiate their liens. The sheriff sale is next week. What would you recommend? thanks in advance.
Joe
What would you recommend? "
Joe, you'll have to write a check, or pass. I'd recommend that next time, you follow applicable due digence procedures and get your homework done...
This was a totally avoidable situation... additonally, the homeowners placed their faith in you to 'pull this off' and if you walk away... you will have let them down....
Consider this 'tuition'
[addsig]
SSPRO,
I am a little confused. I thought I did my due dillegence, but the title company could not get the exact dollar amount from Child Support until last week.(this process took 3 weeks). Before I went through this process, I told the seller that in order from me to complete this deal, we would need to have a clean title and that he would need to devolge any information to me before we go down this path. The seller told me that he owed a couple of thousand dollars in taxes.......What would you have recommended?
Do you have title insurance in your area? If you do, instead of doing a judgement search, can you get a way with title insurance and let it cover whatever comes up?
Toronto, before a title policy is issued... the TI Co will perform applicable searches and, before passing of title from the Seller to the Purchaser, require that any liens/encumbrances are satisfied to assure clear title.
Pro,
I forgot to realize that insurance policies differ from area to area. In my region, lawyers sell insurance for a measly CDN $185 in-lieu of doing certain searches (including but not limited to judgements). Reason for including judgements in the insurance, is because with our system its difficult to figure out which of the 285 judgements against "John Smith" is for the same John Smith you are buying the house from. Of course, these 285 results do not include for variations such as "Johnny" and "Jonathan!"
I thought that only licensed title insurance providers could sell title insurance. I wasn't aware that an attorney could sell a title insurance policy...without specifc searches.
Who pays in the event that the title is bad? The lawyer?
Insurance company. The company that provides it is titleplus(dot ca)
So you are saying that a person can go into contract to buy a house with clouded title, pay for an el cheepo title insurance policy, and the insurance company will pay the judgments?
Short Sale Pro:
I respect your expertise in the short sale biz a lot but I did have a little problem with this one:
Quote: additonally, the homeowners placed their faith in you to 'pull this off' and if you walk away... you will have let them down....
While I agree that you have a responsibility to be good to your word so does the seller. If JJ were to walk from this deal over the liens that the seller misrepresented I wouldn't have any problem with that. Are you saying that you should perform on your part of the contract even if their part is not as advertised?
JJ,
Deals fall apart all the time! I would'nt
" Pay Tuition" as Pro said, I would rather go and physically meet the individual lein holders in their offices face to face. Sometimes those telephone tough guys will soften up once you are in their presence. Besides this will be a great networking experience to get a better sense of what you are up against if you encounter this situation in the future. You owe it to the sellers who put this transaction in your hands to at least make every possible attempt to resolve their problem. Yes this is their problem, but you made it yours once you agreed to take on the deal. Don't just walk away and take an armchair approach, go out and meet the individuals responsible for throwing a monkey wrench in the plan. Take all the ss info and state your case as the seller is receiving no economic benefit from the proceeds of the ss.
Once the bank takes over the property
everyone loses.
dl will
[addsig]
Also, you may want to contact the bank and the foreclosure attorney and let them know about the problem of the multiple leins. Sometimes they will extend the Sheriff Sale for 30, 60, 90, days, for a fee (@ 300-500) if you present your case properly and follow through.
dl will
[addsig]
"While I agree that you have a responsibility to be good to your word so does the seller. If JJ were to walk from this deal over the liens that the seller misrepresented I wouldn't have any problem with that. Are you saying that you should perform on your part of the contract even if their part is not as advertised?"
No, but this problem was avoidable. Part of the speculator's job is to anticipate problems.... when the Seller indicated he owed a few grand in taxes... that's a RED FLAG. The presence of a variable has been disclosed. It's the speculator's job to define that variable. Now. Today. Not wait until closing.... that smacks of illpreparedness (nothing personal, just an observation based upon a forensic review of hundreds of cases) (I review failed realty transactions resulting from allegations of wrongdoing by Homeowners for the Mortgage Bankers Association as an outsource resource)
If there was a material misrepresentation by the Seller, that's one thing. The Buyer has every right to walk. But there is a duty encumbant upon the 'professional speculator'
to clear the path...
In this case, presenting the short sale proposal before all facts were in evidence was premature... and it blew up in his face.
The speculator can walk away and move on to the next deal... and leave the Seller in worse shape.
Most of the johhny come lately speculators profess that they "want to help people" but then blame others when their deals fall apart (Joe wasn't doing that, but many people do)
It boils down to properly prequalifying the short sale candidate.... before you go into contract. before you spend time. before you raise everyone's hopes.....
In this case, Joe (and many, many others) relied upon a function of closing instead of being proactive.
================
I am in my third term as executive director for a non profit housing counseling organization. We work with folks across the USA who face the loss of their home due to foreclosure. Increasingly, our Clients come to us following a bungled attempt by 'speculators' to creatively avoid foreclosure... Most of the transactions were bungled due to faulty preliminary work. Avoidable.
The better and more comprehensive your preliminary work... the greater your chance for transactional success.
Just my $.02
SSP,
Yeah, I agree that Joe probably should have got on this sooner and I certainly agree that lots of folks out there claiming to "help" people in fact leave them in even worse shape.
Returning to Joe's problem. The child support lien may be willing to release title for a lot less than their $11,000. doing so doesn't release their claim against the seller it only allows you to get clear title. You're going to have to find somebody with a brain to talk to (never easy in a bureacracy) but if you do it should be an easy matter to convince them that three or four thousand now and a continued claim against the seller leaves them in better shape than an $11,000 claim they won't see any of.
As far as the DMV goes, Does this mean something different in NJ? Here in Illinois DMV= Department of Motor Vehicles. What is this claim for? $10,000 is a lot of money for the DMV to be owed. Again if you can get to somebody with a brain the "part of the money now is better than all of the money never and you can still chase the guy" argument should work.