DOCS? Is This A Way Round It?
Would putting a cloud on title keep other creditors that file after my cloud from attaching liens that will take proirity over my contract. I have a seller that is in facing foreclosure. So i put a cloud on the house. Just wondering is that all it would take to protect my interest or should i use a land trust?
Yeah John,
everything is disclosed but what i am wondering is if the liens are attached to property after i put a cloud on it. Would they be able to siphon my profits out of my deal.
Ex Value 98k
Mortgage 75k
agreement for deed 75k
Cloud on the property.
So all the equity is mine. If a mechanic lien is placed on the property for 5k will they have recoused since i have all the equity. A paralegal told me that the lien would be attach to the seller personally since i have all the equity. Since i do have a contract on the property my interest is protected without the need of a land trust. What do you think.
I want a clear answer to this question please.[ Edited by charlotteinvestor on Date 03/12/2006 ]
So if there are no other liens except the underlying mortgage. My cloud will protect me from other liens that post after my cloud is this correct? Since my cloud will be superior to any posting after me. Land trust in NC is rather shaky. Since this homeowner is facing foreclosure will it be wise to put the deed in my companies name? These are two very tough questions hope you can help.
charlotteinvestor,
No, your cloud will not protect other liens or emcumbrances from attaching to the property as long as it remains in the sellers name. If the IRS or the State attaches a lien after you do, tell them they cannot attach a lien since yours is there, see the point.
Take title to the property in your entities name and record then no more liens or encumbrances will attach.
John $Cash$ Locke
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I dont mind other liens being attached to the property as longs as they cant absorb my equity. So this is how it will work. Correct me if i am wrong. I record my cloud now, then say a mechanic lien gets record after me, their lien will be inferior to mine and i will get all the equity and then theirs will be left with no equity to cure the debt even though it was attached to the property. I will be able to collect all the equity right?
I understand what you are saying but i do not want to trigger the DOSC since the property is facing foreclosure.
MTNwizard do i even need to use a land trust if i file a memorandum or cloud the title? I was told that if i use a land contract then i would not have to do a land trust. By me having a contract on the property any lien placed after on the property will have no recourse on my equity. Once i cash out the underlying mortgage. The inferior liens will be wiped away or personally attached to the seller. Am i wrong?
No John,
I am just performing a land contract. meaning i will buy the property for the amount of the mortgage. Then what i am doing is putting a tenant buyer in the property. Just want to make sure that no one can come in later and say "Hey i placed my lien after the land contract i still would like my lien to be cured." I dont want to focus on fixing the property up and then some mechanic lien pops out of no where and spoils my plans. Understand. I am setting up an agreement for deed that s it.
charlotteinvestor,
Enlighten me you are doing a land contract what does that mean you are doing?
John $Cash$ Locke
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It means that i plan on buying the property for the amount of the mortgage, then i will sign a separate joint agreement with the seller saying that i will give him 4k dollars once my tenant buyer cashes me out.
Basically the seller is providing the financing.
So what i want to know is since i am buying the property for the amount of the mortgage. Is any and all of the remaining equity mine and only mine? Like i said i dont want another lien popping up a month before my tenant buyer cashing me out and ruined my idea of profit.
No i was not thinking of getting the deed. Do you think i need to get the deed to protect my interest from other creditors snooping and taking my interest at a later date? Even though i have a cloud or memorandum on the title?
Plus the owner of the property is in another state. If that will help.
[ Edited by charlotteinvestor on Date 03/12/2006 ][ Edited by charlotteinvestor on Date 03/12/2006 ]
charlotteinvestor.
That has been what I have been saying all along, you need the deed so no further liens or attachments can attach.
A point was brought up about a Mechanics Lien so you need to check the state statutes to see if this would apply in NC. However, if the person is losing his house I doubt he went out and had work done on his property.
John $Cash$ Locke
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That is my question too? If a lien was placed after my cloud. Would i have to pay that lien of to get clear title? Thats all i want to know nothing else.
A paralegal said i would not have to pay off a lien that was recorded after my cloud. So was i just wondering what other people thought of this situation.
I am ready to do deals, and in the process of finding more deals like this one so i wont have to worry about finding lenders.[ Edited by charlotteinvestor on Date 03/12/2006 ]
charlotteinvestor.
Yes!
John $Cash$ Lcoke
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Thanks John, because also a course that i order said all i need to do cloud the title that was it. Was just looking for more advice.
Thanks for your help. I know this post here might have been good to add to one of your courses. I just looked over some of your course reviews. You seem to have pretty solid reviews.
charlotteinvestor,
Just trying to keep you out of Harms Way, last thing I want to see is someone as devoted as your are in becoming a professional in this great industry get off to a bad start.
John $Cash$ Locke
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charlotteinvestor,
NewKidInTown3 and John $Cash$ Locke are both correct.
However, if I were you I would,
1. Execute an Option Agreement whereby the seller would grant me an option to buy the property for a pre-determined price.
2. Record a “Performance Trust Deed” as security for the performance of the obligations created in the Option Agreement.
3. Record a Memorandum of the Option Agreement”.
In the event that some party (including the seller) were to encumber the title to the property, said party’s interest would be inferior to mine. When an option is exercised, the interest the optionee acquires in the property relates back to the time the option was granted. In the eyes of the law, it’s as though the optionee purchased the property when the option was granted, rather than when the option was exercised.
See……….. Anthony v. Enzler, 61 Cal. App. 3d 872, 132 Cal. Rptr. 553 (1976)
I hope this helps.
Darryle-Ca
Gee Darryle,
That is brilliant, how would i go about finding one of those deeds? An will in violate the DOSC?
[quote]
On 2006-03-12 15:59, charlotteinvestor wrote:
Gee Darryle,
That is brilliant, how would i go about finding one of those deeds? An will in violate the DOSC?
[/quote
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It does not violate the DOSC because no sale has taken place. Here is a copy of what I use in California.
RECORDING REQUESTED BY
DARRYL EVANS
AND WHEN RECORDED MAIL TO
JORGE ALVARADO
7722 LAMKERSHIM STREET
HIGHLAND, CA. 92346
APN NO. 1192-181-027
PERFORMANCE TRUST DEED
This Deed of Trust, made this 13 TH day of SEPTEMBER 2005, between DARRYL EVANS, herein called Trustor, whose address is 7722 LAMKERSHIM STREET, HIGHLAND CA., 92346, Stewart Title of California Inc., herein called Trustee, and ABE WILLIAMS, herein called Beneficiary,
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN TRUST, WITH POWER OF SALE, that property in SAN BERNARDINO County, California, legally described as:
THE NORTH 30 FEET OF LOT 30 AND THE SOUTH 20 FEET OF LOTS 28 AND 29 OF TRACT NO. 2625, FREIDMANN SUBDIVISION, IN THE CITY OF HIGHLAND, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 37 OF MAPS, PAGE (S) 25, RECORDS OF SAID COUNTY.
TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right, power and authority given to and upon conferred Beneficiary by paragraph (10) of the provisions incorporated herein by reference to collect and apply such rents, issues and profits.
For the Purpose of Securing: 1. Performance of each (“AGREEMENT”) of Trustor incorporated by reference or contained herein. 2. Performance of the obligations evidenced by one Option to Purchase (“AGREEMENT”) of even date herewith, and any extension or renewal thereof, in the principal sum of $ 500,000.00. 3. Evidencing the creation and perfection of a U.C.C. 1 Financing Statement filed with the California Secretary Of State as Document No. __________________________________ and Filing No. _______________________________.
To Protect the Security of This Deed of Trust, Trustor Agrees: By the execution and delivery of this Deed of Trust and if applicable the rate secured hereby, that provisions (1) to (14), inclusive, of the fictitious deed of trust recorded October 23, 1961, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, viz.:
COUNTY DATE BOOK PAGE COUNTY DATE BOOK PAGE COUNTY DATE BOOK PAGE COUNTY DATE BOOK PAGE
IMPERIAL 9/10/68 1267 574 ORANGE 9/6/68 8714 147 SAN BERNARDINO 9/6/98 7090 14 SANTA BARBARA 9/6/68 2244 922
KERN 9/6/68 4195 363 VENTURA 9/6/68 3363 84 SAN LUIS OBISPO 9/10/68 1489 429 LOS ANGELES 8/28/68 T5910 842
RIVERSIDE 9/10/68 ACCOUNT = 87097 YEAR 1968 SAN DIEGO 9/10/68 SERIES 9 BOOK 1968 PAGE 155820
(which provisions, identical in all counties, are printed on the reverse hereof) hereby are adopted and incorporated herein and made a part hereof as fully as though set forth herein at length; that he will observe and perform said provisions; and that the references to property, obligations, and parties in said provisions shall be construed to refer to the property, obligations, and parties set forth in this Deed of Trust. The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to him at his address hereinbefore set forth.
Date___________________ ___________________________
DARRYL EVANS
STATE OF CALIFORNIA
COUNTY OF ________________________________________________} SS.
On__________________________before me, ________________________________________, personally appeared __________________________________ personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature______________________________________________
Thanks Darryle,
never heard of the PTD. Will check further into it. You guys have been alot of help.
My Memorandum contains the following language:
BE IT NOTED THAT ALL LENDERS AND THIRD PARTIES ARE HEREBY PUT ON NOTICE AND DULY WARNED THAT ANY MORTGAGES, LIENS, OPTIONS, OR PURCHASE AGREEMENTS OCCURRING SUBSEQUENT TO THE DATE OF THE AGREEMENT SPECIFIED IN THIS AFFIDAVIT ARE HEREBY DECLARED BY OWNER OF RECORD TO BE NULL AND VOID AND OF NO LEGAL FORCE AND EFFECT. ANY SUCH THIRD PARTIES MAY PROCEED AT THEIR OWN FINANCIAL PERIL.
Not that it is definitive (although it may sometimes be an effective scare tactic and bluff), but this may work in some cases.
_________________
"A deal is only as good as the quality of your Contracts." --Me[ Edited by LeaseOptionKing on Date 03/13/2006 ]
I thought the Seller had to sign anything that puts a mortgage on the property (except for mechanics liens and the like).
[addsig]
Simply put, if the deed is not put in your name, you do not own the house.
The person whose name is on the deed can cause all sorts of liens and judgments to be put on the property. Your memorandum of agreement does not give you an equity position. It just makes it difficult, if not impossible, for a subsequent buyer to get title insurance without your quit claim.
The house can be foreclosed out from under you and you may have to try to convince the judge that you have an equity position. Better have some good back-up paperwork because the ranking (first in time, first in line) situation is not absolute.
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