Bought property with a credit lien...need advice

lorian · #1 03/04/11, 11:51 AM

We bought the pasture next to us (1 1/2) acres for 1,700 in back taxes.
We did this so no one else would buy it and slap up something junky.

BUT

It has a credit company lien of $25,000 from the former owner. They are highly UN-likely to foreclose (we've had it for 8 years) because it has no access. The only access is through our property. The lawyer we talked to at the time said unimproved/no access land has little value to them.

We'd like to get the lien removed and negotiate with them for a much reduced amount. Any real-estate experts out there have any good advice?

1. Tell me the best way to go about the negotiation process.

2. What paperwork do I need to get from them to make sure the lien is removed fully?

3. Can anyone explain "quit claim" deeds to me in more detail?

Believe it or not, I've been searching on line a lot but I just keep coming up with junk sites that are advertising...no real advice on this matter.

Yvonne's hubby · #2 03/04/11, 12:09 PM

Quote:

Originally Posted by lorian

We bought the pasture next to us (1 1/2) acres for 1,700 in back taxes.
We did this so no one else would buy it and slap up something junky.

BUT

It has a credit company lien of $25,000 from the former owner. They are highly UN-likely to foreclose (we've had it for 8 years) because it has no access. The only access is through our property. The lawyer we talked to at the time said unimproved/no access land has little value to them.

We'd like to get the lien removed and negotiate with them for a much reduced amount. Any real-estate experts out there have any good advice?

1. Tell me the best way to go about the negotiation process.

2. What paperwork do I need to get from them to make sure the lien is removed fully?

3. Can anyone explain "quit claim" deeds to me in more detail?

Believe it or not, I've been searching on line a lot but I just keep coming up with junk sites that are advertising...no real advice on this matter.

quit claim deeds simply transfer any claim of ownership some one or some entity MAY hold regarding a property. I can legally give you a quit claim deed to the Brooklyn bridge, but that doesnt mean you have any claim to it whatsoever. Only whatever claim I might have had..... which is none. They are most commonly used in settling matters in civil suits, divorces, inherited properties divided among several family members and things of that nature.

It has been my experience that financial institutions are extremely reluctant to release any lien once they have them established without full compensation..... but that isnt carved in stone. Your best bet would be to seek legal counsel, and find out if the institution can force anything or if it just rides on the title. If they cannot force a sale of the property, then I wouldnt worry too much about it. These things vary from one state to another, and there are numerous variations on the types of liens as well so a good lawyer would be the one to ask about your particular case.

lorian · #3 03/04/11, 12:17 PM

Y. Hubby, so your saying "quit claim" deeds are not important?
Also, "find out if the institution can force anything or if it just rides on the title." Can you expound a bit on that?

Pouncer · #4 03/04/11, 12:24 PM

Quit claim deeds are indeed very important! An example: My hub had a bunch of rental properties with another woman (before I met him). Most of them were in his name, but she managed them. When they broke up, he signed a quit claim a bunch-including a four plex.

Sounds great, right? Wrong. While he technically did not own the property any longer, he did own the debt. IOW, his name was still on the mortgage. Consequently, this showed up on his tax returns (and credit score) as a debt until she eventually got it refinanced or sold it. Caused all kinds of issues trying to get a home loan, let me tell you!

lorian · #5 03/04/11, 01:19 PM

New development...Seems the credit company that held the loan no longer exists? How in the world am I going to find the company that holds the lien now??? I've been doing a search on line but so far I can't figure it out. Oh brother!

copperkid3 · #6 03/04/11, 01:24 PM

Quote:

Originally Posted by Yvonne's hubby

Your best bet would be to seek legal counsel, and find out if the institution can force anything or if it just rides on the title. If they cannot force a sale of the property, then I wouldnt worry too much about it. These things vary from one state to another, and there are numerous variations on the types of liens as well so a good lawyer would be the one to ask about your particular case.

***********************************************
same paragraph. My personal advice would have been to have done the research first PRIOR
to the purchase, by having a lawyer who specializes in such matters check it out for you. Since
you've now bought it, you've also 'inherited' all the faults that go with it. Even if they can't
force the sale of the property, the title is now "clouded" and will be until it is removed through
legal means. The main 'worry' is that further down the road, if this cloud remains, another potential
purchaser may (or may not) be willing to buy it......most won't because they are unsure of what
the lien may (or may not) entail.

Get professional help on this one.

Old Vet · #7 03/04/11, 01:31 PM

Whether you like it or not you need to see a lawyer. The lean should have been payed off when the property changed hands but since you bought it for taxes you may have bought the lien also. Find a good lawyer and follow his advice.

Beeman · #8 03/04/11, 01:44 PM

Every state is different and in some cases every county is different. I'd say no one here is qualified to give you real advice aside from contacting a real estate lawyer in your area.

Michael W. Smith · #9 03/04/11, 01:53 PM

Most "tax sale" properties - "buying it for the back taxes" usually always states in the paper (if it was an ad you saw) or before you buy it they say "We are not responsible for any liens against these properties - buy at your own risk."

You usually have to do some checking through the courthouse to see if there are any liens. But that wasn't done, and now you bought it.

Most liens go with the property. However, I would be more inclined to "plead ignornace" if sometime in the future some company comes looking for you. I would assume there has to be a statute of limitations on something like that - so if you bought it by buying the back taxes, the company won't be paying taxes on it. And especially with it being a defunct company - it's hard to tell what happened with the paperwork on the lien - it could have been bought by some other company, or all the lien paperwork may be lying in some garbage dump after people cleaned out the office.

As for seeking legal advice - if you go that route - I would suggest seeking a lawyer that strictly deals with property transfers - not the local lawyer who does a myriad of things (wills, estates, DUI's, etc).

Txrider · #10 03/04/11, 02:00 PM

Quote:

Originally Posted by Beeman

Every state is different and in some cases every county is different. I'd say no one here is qualified to give you real advice aside from contacting a real estate lawyer in your area.

Yup the OP needs to acquaint themselves with their state laws. And a lawyer is the quickest way.

I have been looking into attending some tax auctions and buying some tax foreclosures.

From my understanding in my state, a tax sale extinguishes all liens save for bankruptcy and IRS which trump state tax.. Any other lien the tax sale purchaser is not responsible for and does not stay with the title..

The former owner can be held responsible but the lien detaches from the property. He also has two years to pay back the tax sale purchaser with interest and costs and he can get his property back. Interest is 25% in the first year, 50% in the second year.

So in my state as long as there is no bankruptcy lien or IRS lien you get the property, or you get a 25% or 50% return on your money, or you get the property free and clear in two years.

But states vary widely, and Texas seems to be basically the state most in favor of the tax sale purchaser.

rambler · #11 03/04/11, 02:24 PM

Usually a credit company does not go away - it's assets are bough by a bigger credit company. So while the name may not exist, I'm sure the paperwork trail is in some file somewhere.

I would hesitate to wake up the company that now owns the lean, and start dealing with them yourself. You might get more than you bargin for. Whomever owns it likely has it tucked away in a big batch of paperwork & doesn't even know....

To clean this up, your money will be well spent on a good real estate lawyer. You want it to go away cheaply, and a couple 100 dollar an hour lawyer may well be the cheapst route to that!

How was the sale done, it's possible all claims should have fallen off and this one just didn't - then it's paperwork to bring records up to date and correct the error. And many other possibilities.

--->Paul

mamita · #12 03/04/11, 02:41 PM

I'd also say see a lawyer, as you bought the property often equals you bought the debt. hope it works out ok for you!

Nevada · #13 03/04/11, 03:09 PM

Quote:

Originally Posted by lorian

Y. Hubby, so your saying "quit claim" deeds are not important?

Quitclaim deeds are of course important, but not always appropriate. Where quitclaim deeds are appropriate are in cases of intrafamily transfer, such as from husband to wife during a divorce. The problem with quitclaim deeds is that they make no claim or promise of ownership interest. They only give-up whatever interest the granter might have in the property, which may be none.

The $25K lien is bad news. I don't know what reason you might give to the bank to drop the debt. I suspect that they won't drop it, then when you go to sell it they will take the first $25K from the escrow. Maybe you could share with us the reason you think the bank might deal with you.

What I'm wondering is how it happened. Why didn't you know that a lien was filed against the property? Did you look in the recorder's office?

sirquack · #14 03/04/11, 03:29 PM

One other thing I would also look into, and I am sure the local real estate attorney will know if it will matter or not. Force the new bank or lender to certify (terms vary) or prove there is a lien on the property. I think from that time, they have to provide proof of the indebtedness and if they don't you can get the lien waived. It is a tool some friends used on bank notes bought by a now defunct company. The new lender was applying screws to get them to change the terms of their loans (again this was related to loans and not liens) to better benefit the bank. Once they got a lawyer involved, the new lender could not even produce the original loan documents and had to eat the remaining balance altogether.
While it was a little sneaky and under handed, it was all brought about by a slimey lender who wanted to increase their cut instead of accepting the debt as originally written. Serves those turkeys right in my humble opinion.

Darren · #15 03/04/11, 04:21 PM

If the original loan company is no longer in existence.

1. Find out what address is associated with the lien.

2. If it's a P.O Box, the post office has to tell you the physical address of the boxholder if the boxholder is a business/dba but not for a private individual not using the box for business purposes. You can get that info over the phone. If a clerk gives you a hard time, ask for the postmaster.

3. Check to see what is currently located at the physical address. If it is not a financial institution you are looking good. After a certain period, six months?, the post office no longer keeps forwarding info.

4. Check with the secretary of state in that state for info on the business, if it was a corporation that held the lien and their charter has expired, they are no longer legally in business. The secretary of state should have the physical address info. In many states this info is online.

5. With your attorney's concurrance or involvement, if there's no longer any evidence of the company's existence and a successor, send a certified letter including a request for the current address to the old address. Ask for a return receipt. Do this only if you absolutely know the company is out of business and there is no successor as confirmed via the secretary of state. The letter will come back to you marked no such addressee.

6. After you have all the documentation, have your attorney submit it to the proper court and have the lien removed by court order. WV has three levels in the court system. Here the submital would be to the circuit court.

Above all talk to a knowledgeable lawyer. If they have to study the issue and can't tell you on the spot what has to be done, you're talking to the wrong lawyer.

rambler · #16 03/04/11, 04:22 PM

Quote:

Originally Posted by Nevada

What I'm wondering is how it happened. Why didn't you know that a lien was filed against the property? Did you look in the recorder's office?

In many situations those things are dealt with during the sherriff's sale? It shoulda ended there with that sale.

A lawyer would be needed to sort out why it did not. Perhaps because the lender was no longer around, the paperwork never got 'finished' to get rid of it? It just stayed open because no one from the lender ever got back to them.

--->Paul

lorian · #17 03/04/11, 05:29 PM

To clear up: we knew about the lien when we bought it. The property is worth FAR more than the lien so it was worth the gamble. We bought it for county taxes.

Darren, you sound like you know what you are talking about..are you a lawyer?

I like what you are saying, is there somewhere on the web where I could study more about what you suggested?

I did contact a lawyer today, the lawyers assistant wasn't much help. I guess I need to find a better one.

Patt · #18 03/04/11, 07:56 PM

Liens do expire after a certain amount of time. Unless the company renews it the lien will just fall off. I would try and quietly find out when it expires.

Belfrybat · #19 03/04/11, 08:46 PM

The lien will be on file at the County appraisal office or the clerk's office (or whatever it is called in your State). It usually just costs a few $$ to have a copy made (cost me $2.50 here). That will indicate the term of the lien, if there is one. I purchased my current property knowing there was an IRS lien on it. Two had already "expired" without being renewed so I took a gamble that the third one would also not be renewed. I'll know in November if that is the case. If it's renewed, I'll then contact an attorney to work something out. Mortgage liens might be different, but I'd first start with getting a copy of the actual lien, then contact an attorney if the lien is open-ended.

Mortgage companies will often take pennies on the dollar to clear their books. You really do need to see a real estate attorney, but take the paperwork with you or you'll pay him/her big bucks to do the search.

MN Gardener · #20 03/04/11, 09:15 PM

Quote:

Originally Posted by Patt

Liens do expire after a certain amount of time. Unless the company renews it the lien will just fall off. I would try and quietly find out when it expires.

Patt is right, in MN a non mortgage, non gov't lien expires after 10 years and has to be put back on if they want to keep holding the lien. A mortgage lien expires 10 years after the last payment date of the mortgage.

Why are you worried about the lien? If they are not foreclosing, I would let sleeping dogs lie.

A Quit Claim Deed does not guarantee that the person giving the deed owns the property. They are usually used in divorce situations or family situations to correct title. I can give you a Quit Claim for the Golden Gate Bridge..but you would only get the interest I hold in it........which is nothing. If I did own the GGB, you would get all the interests I own.