Principal 181000 ARV 240000
Prepayment penalty 0 Monthly payment 1900
Arrears 12000 Length of project 6
Owner payout 0
Purchase price 193000
Closing costs 1000
Rehab 8000
Carrying costs 5790
Realtor fees @ 0
4.00% 9600 (yes I would pay 4% for a full listing)
mtg payments 11400
Total expenses 25790
Profit 11210
I was going to take this subject 2. originally the arrears were only 4500 but after getting the numbers from the bank, it was almost 12k with atty (foreclosure fees) and more missed payments… Then the monthly payment went up for some reason which I didnt get a chance to find out why (not enough time). Then the deal breaker was I couldnt get clear title. Apparently the original construction loan from 1999 was still showing as a open deed. I was told more than likely it had been paid but if the companies were out of business, it could be a mess to clear up. 6 months and $2500 in legal fees.
This house was a a nice house, 8 years old and just needed paint, and some granite counter tops. Cabinets were very nice. The house had been listed on the MLS for several months but we felt it wasnt ready. Had some odd paint and seemed unkept. We figured we could clean it up and make it move in ready. We looked at the other homes for sale in the subdivision with our realtor and we agreed that 240 with the minor upgrades we were planning would be a great price for the home as most were close to 300 but had some more features.
Anyway, yesterday was the last day, as it was going to auction today and I told the seller w/o a clear title I couldnt buy. Even though I am sure the original loan was paid, I couldnt take that risk. Did I pass up a good opportunity or did I do the right thing and pass? Do my numbers look right (i know my closing costs are low)?
I am fairly certain you would need to bring a quiet title action. This is a legal proceeding to remove cloud over title and perfect it. However, without some type of proof the lien had been satisfied, I’m not sure successful and/or quickly this could go.
the atty said more than likely it was paid and that it was sloppy work by the previous title companies. The house was purchased and refi-ed with this and they probably received proof of payment but didnt clear it in the county records.
Its as simple as contacting the original parties and getting proof of payment. If the previous mtg company is no longer around, then letters have to be mailed to all parties involved and its a time consuming process, about 6 months. There was no way i was willing to wait 6 months to clear title and get it on the market.
so if you wanted to pay cash for the property, just say.
and your intentions were to hold it, indefinitely, to rent.
the cloud only effects your ability to sell it.
and if you find another cash buyer, you can still sell it, as long as the buyer doesn’t consider the situation a deal breaker…right?
what about getting in writing from town clerk something to the effect that this matter be closed after X years and thus the cloud on title could be considered…closed…or something.
i mean, if the mtg co and all parties are next to impossible to contact or they don’t have the proof, since it was so long ago (records discarded), there’s no way to clear it up any other way, except i guess through sworn testimony, affidavits and such…
It clouds the ability to sell becuase you have an additional unreleased lien. Just becuase no one is not around to show up to say differently does not change the situation. Many title insurance comapnies will not insure this or will exclude that lien. If someone shows up tomorrow and has that trust deed in their hand, they can demand payment or foreclose and take the property. This can happen as business get sold and assets get sold. There are people who buy up this kind of stuff for pennies on the dollar and then go around try and collect. If you got nothing to prove it was paid off…
Yes, in many cases the explaination offer is corrected. However, the chain of title established in the public record is the LEGAL list liens outstanding liens. Changing that is not an arbitary thing.