I came across this ad online, a woman is giving out her deed on the house for free. she had a huge problem with her tenants. they live there and dont pay rents, and somehow (strangely) kicked the owner out of the house.
she wrote a sad story about it, and it was pretty devastating.
however, i need more information to work on this deal. I am a total noob and not so good at asking the right questions. All i know so far is that her name is the only name on the title, she is willing to give it to anyone for free. the house was under power of sale and it seems as if she stopped it by filing bankruptcy. i am not sure of the details. if I get it i need to evict the occupants right now.
i need to find out the details tomorrow. i will probably go meet her. She lives far away.
so question is, what do i need to do for preparation? i don’t even have a RE lawyer yet. do i need to find one first?
Get the house on contract and then find out how much is owed on taxes. When you close on the property the Title company is going to probably require someone to pay the back taxes in order to get a clean title.
These tenants sound like veteran deadbeats, so if I were a you I’d definitely hire a lawyer for these guys. One of the biggest mistakes new or old investors make is letting tenants walk all over them.
Bring a Purchase Agreement
Ask her to bring in a copy of one of her tax stmts so you guys can contact them.
If she signs then contact a Title Company and begin the closing. With no mortgage loan the Title Company can get you closed in 1 week. The Title Company will let you know if there are any liens on the property.
i talked to her already. on the phone… so far nobody wanted to touch it because her situation is soooo confusing. after called her 3 times i still dont know what the hell is going on.
a brief overview:
she bought the house for 240k
a year later 2 guys (friends) moved in, paid off her mortgage, and now they wrote an agreement for her to pay them same interest. so they make the money and bank dont. and she basically got 25k from them on top of what they paid off the mortgage. so 265k in total. she said she settled this already.i dont know how. they are living in there without paying rent.
her name is the only one on the title.
she doesnt have the money to get a lawyer to evict those 2
now she is sick of it all just want to get rid of the house.
thats all i can understand over the phone. I believe i need to review what was written on their agreement when she burrowed the money. or i dont need to? i asked her to get the paper work together and i will see it next week.
should i just get the house first and worry about the rest later?
You need to sit down with her and have your lawyer present to look over EVERYTHING she ever signed regarding this house. For all you know the 2 living their have legal title or maybe are part owners based on them paying off the mortgage. A few hours of your lawyer’s time may cost you a few hundred but its a worthwhile investment if this pays off, if it doesn’t pay off you didn’t lose too much. Be prepared to have money for:
Insurance for the dwelling
Owed back taxes
Personally, I wouldn’t waste a lot of time or money on this “deal”. From what you said, she recently paid $240K for the house. It sounds to me like she refinanced the loan with these two characters, that’s why she’s paying them interest. Why or how they got in the house, I have no idea. At any rate, it sounds like somewhere around $265K is owed on this property. Is the property a deal at $265K. Her giving you the deed isn’t going to mean squat if these guys have a mortgage against the property. Even if you somehow get the deed, you are going to get involved in a lawsuit. Whoever has $265K of their money in the deal is NOT going to let you walk away with their property - guaranteed!
i see. but i still want to investigate this more.
the only thing i have to do is get a lawyer do a transfer of title, then the lawyer will find out everything against the property. If the title is right and its free and clear no liens against it, then its all good right?
You are right. You can have the Title Company which might be a law firm guarantee that the Title is clear. I’m not sure of the exact rules but the Lawfirm/Title company I use guarantees that the Title is clear or they will pay for it. Unfortunitely propertymanager is probably correct in that she probably owes $265,000. I find it very unlikely that she owns it free and clear.
Yes, you could have a title search done on the property and have buy title insurance. In an ideal world, you could get the deed and everything would be good. Unfortunately, things just don’t work out that well in the real world. In the real world, no-one is going to give you a $265,000 free and clear house for free. If the owner has an unrecorded deed or unrecorded mortgage, this thing is going to end up in court and you are going to bleed green trying to keep it. Lawsuits literally take years and tens of thousands of dollaars to play out and you could easily lose (even if you did nothing wrong). Worst case, you could be accused of being involved in a criminal act, depending on what the real circumstances are in this case.
Also, title or other insurance isn’t what most people think. Insurance companies are in business to make money, not pay claims. If they think something is amiss, you may have to sue them also to get them to fulfill their obligations, especially if a lot of money is involved.
If I were you, before I wasted money on a title search, I would try to get the details of this deal from everyone involved. Did the woman sign a mortgage or note? Why did she let these guys move in? Did these guys buy the property? Are they partial owners? Did she sign a lease with these guys? I’d go talk to them also. What do they have to say?
This thing stinks so bad I can smell it here in Ohio!
haha…ok. i guess your advice is prudent. And i will meet her first before doing a title check. in fact now i come to think about it after listen to what you have said, many things have become suspicious.
i will figure this out, and post a follow up and her website that has her story.
however i dont see how she can benefit from this. what could be her motive?
no matter who she transfer the title of the deed to, the lawyer who does that is going to check on the title and find out any liens against the property. so what can she possibly gain by lying?
My Title Company would not like to hear what propertymanager wrote, but it is probably true. They talk very strong in their guarantee of a clean Title or they will pay. But if it came time to write a check for $265,000 they would probably would forget where their pen is. :smile
You definitely want to meet with her and get it under contract before you do any Title searching and make sure to have plenty of contingencies so you can get out of the deal if it gets to fishy. A $265,000 loan takes 30 years to pay off, so I don’t think she paid it off in a short couple of years. Who knows maybe it will turn out to a great deal.
I could think of a lot of scenarios, but they would all be speculation. You will have to do whatever is necessary to get to the truth. I would be VERY CAREFUL about giving any of these people your personal information. I’m not convinced that this isn’t some sort of scam or illegal activity. Just Be Careful!
Most title policies have an exemption that says they do not cover “rights of parties in possession”. I bet that this is especially true if the parties have loaned the owner money on the house. So even if they haven’t recorded their agreement, they are good.
while my friend is working on the million dollar deal…i am working on this investigation! yay…two dangerous scenarios at once.
so the lady is supposed to meet me Wednesday, because i asked to see paper works, and she said she needed some time to prepare.
i forgot to ask two OBVIOUS questions, why doesn’t she want the deed and why don’t the tenants want the deed…how dumb, lesson learned. always get to motives first. i would agree the property still has a 240k lien somewhere. right now its worth about 290k.
hm just so to make it clear, you CANT do a title transfer without a lawyer right?