Question I read on another blog:
I have an issue that I need some legal advice to resolve.The issue involves some rent option property that my wife and I currently reside in. The investor has died and has not lived up to his end of the agreement. We have over $30,000 dollars invested in this property. We found out that he ( the investor) took out an additional mortgage (according to his attorney and our attorney.) on the property. First for the amount of $10,000 and then for $80,000. We have not paid the mortgage since we found out that the who transaction appears to be fraud. We attempted to inform the bank but they refused to speak with us because our names do not appear on any paper work except the cashers check that we gave him and the lease. The investors widow and son who are suppose to be in charge of his estate has declineed to speak with us. We know that this is our house. We need to know how we can keep it or even sell it if possible. The investor had no stake in this property. He did not put any money down and he even received a commission. We don’t know what he did with our money. What do we do.
Reply from Claude:
Quite a situation you have here. Normally I advise my clients (the tenant/buyer or investor) to immediately record ( a good) option agreement* or file a memorandum on the property so as to place a cloud on the title. This prevents any other sale, refinance or over finance on the home. No lender will extend money/credit on a home that has a previous sales/option issues recorded. No buyer will be able to get title insurance until you (tenant buyer) have been dealt with
Note: Most option agreements that I have seen on the web are garbage and are NOT designed to protect you. In addition most “Guru’s” basically copy these same agreements from the web or their law library. A good agreement needs to be designed to protect you interests; accept no substitutes !
BTW My contracts are federally copyrighted and updated every year.
In addition a notorized limited quit claim by all the owners will also add to protecting the potential buyer.
I alway advise my clients to also do a basic title search and have the property enter into escrow with issued escrow instructions.Use a good title-escrow company. Also save all rent and option consideration receipts too.
All of the above will create a paper trail and also prevent the over finance you have encountered.
The land contract argument (above) is possible but a fairly weak argument. Basically the same garbage I read dealing with equitable interest.An option is not a sale BUT a negotiated contratcual right with the choice and not the obligation of a sales agreement!
I would suggest that you or your attorney file a “lis pendens” action ( a lien) against the property until your rights are established by a judge or jury. This will tie up the property from further refinance or sale to another.
Note: If you want to save on attorney fee’s then hire a paralegal or check out Nolo.(no lawyers:-) information source.
You should proceed to to exercise you right to purchase the home and force the heirs (who must honor the previous agreement) to come forth and negotiate the sale with you. If they persist in perpetuating this fraud you could also bring forth a civil suit action too.
As a final not to the readers of this missive I always advise my clients never to make capital repairs and additions to any home they do not have clear title to.
If I can be of further help then just give me a call 970 726 7979
I really do answer my own phone 🙂
Claude Diamond J.D.
P.S. Can’t hurt to also have a monthly copy of the mortgage statement sent to you as part of the terms of your agreement. You should also have an intermediary make the payments on the mortgage too