What happens when original owners divorce in a subject to deal?

General Real Estate Investing
1

I’m working on a Subject To deal; property is owned by my cousin and her husband but they are separated and will probably end up divorced. Both have moved out and abandoned the property, as a matter of fact they even let someone come in and strip the kitchen appliances, master bath tub/shower and a/c unit! They’re young and not too bright - anyways. . .To help them avoid foreclosure I’ve found a buyer who is willing to take the property as-is plus $5k down and take over the monthly payments of $347. They owe $38k total and the ARV is $58k; double-wide plus 2.7 acres in a semi-rural area. So it’s a good deal and I even thought about taking this one over myself and cash flowing it but either way if they do end up getting divorced does the property have to be sold as part of the divorce settlement? What happens to the Subject To arrangement? Thanks!

2

As long as both owners agree to sell, and the deed is delivered (and recorded), it’s a ‘done deal.’ It makes no difference what this couple does after that point. The property belongs to somebody else.
:beer

3

There are a couple of items I would do to secure my position in this transaction.

  1. Get your cousin and spouse to sign a specific power of attorney for the land and one for the mobile home and include the ID # on the POA. If it is a double wide, there will be 2 titles and you will need to get a POA for both.

  2. Put the land and mobile home into a trust, then file a UCC 1 lien against the land, the mobile home, and the names which the titles are in to secure you position and make the lien in favor of the trust. I would make sure that the DMV is notified of the lien rights as the title to the mobile home is through DMV.

  3. A Quit Claim Deed will be needed for the land to accomplish #2 above, and should be filed into the county property records.

Once this is done, resell the property with owner finance terms and reference the trust (whose only asset is the land and mobile homes) as the property being sold via contract.

Hope that helps.

RC

4

Rob, I do what you said routinely, but I’m not familiar with term UCC 1.

Is that a vehicle lien?

5

Here’s one description of a UCC-1:

http://en.wikipedia.org/wiki/UCC-1_financing_statement