Property sold without bank notification.

Discussion in 'Real Estate' started by Darren, Aug 29, 2017.

  1. Darren

    Darren Still an :censored:

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    A friend got a mortgage on property to purchase a double wide. Before that they owned it free and clear. They own five separate parcels. The mortgage was to be on the largest parcel where the double wide was set. Based on the courthouse records, all of the parcels have liens now due to the mortgage. The owner and mortgagee sold one of the smaller parcels to a relative. The bank was never notified to release the lien on that parcel or obtain permission for the sale.

    1. Was the sale of the smaller parcel legal?

    2. What do you think the bank would do if they found out about the sale of one of liened parcels? Would they call the loan?
     
    Last edited: Aug 29, 2017
  2. Hitch

    Hitch Well-Known Member

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    I would think this is one of those situations where getting a real estate lawyer involved would be helpful.
     
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  3. Darren

    Darren Still an :censored:

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    Of course. I'm wondering if anyone has heard of a similar situation.
     
  4. RonM

    RonM Well-Known Member

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    Somebody was asleep at the wheel here.....That lien must be settled before the property transfers..
     
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  5. Darren

    Darren Still an :censored:

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    The courthouse transferred the property.
     
  6. painterswife

    painterswife Sock puppet reinstated Supporter

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    Was the sale recorded at the court house? Often with property sales between relatives this step does not get done - on purpose.
     
  7. Darren

    Darren Still an :censored:

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    Yep! They did not know about all of the liens.
     
  8. sisterpine

    sisterpine Goshen Farm Supporter

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    Wow, I have no idea of the legality of the sale though I suppose if all the papers are signed and filed appropriately the sale is valid but the lien will likely transfer with the property. Sorry you are having to deal with such a mess.
     
  9. RonM

    RonM Well-Known Member

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    The lien is still there until it gets satisfied.
     
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  10. Wolf mom

    Wolf mom Well-Known Member

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    The lien can be transferred to the remaining properties if there is enough equity.
     
  11. Declan

    Declan Well-Known Member

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    The sale was legal but the relative got title subject to the existing lien on the property which will remain a lien on the property until released.

    As for your second question, depends on the bank. Technically they wouldn't need to as far as their lien, but some banks will do that, especially if you didn't pay the proceeds over toward the mortgage. They may release it, or they may not as to that one parcel; they could call the loan or could not (that right is usually buried somewhere in the stack of papers you sign). If it is a local bank or credit union you will have better luck than if it is one of these megabanks/mortgage companies. It is hard enough getting them to release a mortgage after it is paid off, let alone something like this.
     
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  12. TWG1572

    TWG1572 Well-Known Member

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    The only thing I can add is that you state "the lien was to be on the largest parcel"... How did they end up with liens on all parcels? That should be in the paperwork somewhere.

    You can put a lien on whatever you want (within reason) but if the sold property was not supposed to have a lien on it (per the signed loan agreement, not what they thought) then he should easily be able to make the bank vacate the lien.

    Now.....If the bank put a lien on all five parcels because that was what they needed for collateral. He could be in for a very interesting discussion with his loan officer if the collateral will no longer cover the loan proceeds. He would be in violation of the loan agreement, which would give them the legal right to call it. Whether they do or not is another story.
     
  13. Darren

    Darren Still an :censored:

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    It was understood by the borrower that the loan was to be on the largest parcel. I'm not sure what was in the paperwork. The trustee for the bank, an outside lawyer, liened all of the parcels.
     
  14. haypoint

    haypoint Well-Known Member Supporter

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    Banks do not work for their customers. Given an opportunity to glom onto every asset the person has to secure the mortgage, most banks will. My son wanted to re-finance his farm, to get a better interest rate. At the same time, I was selling him 80 acres on land contract. The Bank wanted to pay me off, add the cost and the land to the loan. This increased the amount of interest they'd get, plus make their return higher if they had to foreclose.

    I was a juror in a case where a couple borrowed money to buy a car. Later, husband came in and borrowed money for a motorcycle. Later he borrowed money for a set of drums. Then they split up and he moved five states away, with the motorcycle and drums. Left her the vehicle. After a few months, she realizes she cannot afford to pay for the vehicle, offers to give it to the Bank. The Bank, attempting to help her and prevent taking back the vehicle, re-writes the loan, stretched out a few years longer to get the payments down. During the paperwork signing, they mention the motorcycle and drums. She signs and the payments are lower. Later she realizes they rolled her husband's loans into this vehicle loan.
    A year goes by and she is drowning in debt, takes the vehicle to the Bank. They put it up for bids and high bid is $1000 les than owed amount. They refuse the high bidder, return vehicle to her and a new set of lower, yet longer, payments. She reluctantly agrees.
    Another year goes by and she can't take it any more. Bank agrees to take it back. But it needs a lot of repairs to make it saleable. Repairs complete, bids taken. High bid is $3000 below amount owed. They let it go to high bidder and takes her to court for the remaining $3000. She claims they mislead her. She claims if they would have repossessed it the first time, she'd only owe $1000.
    The jury determined that the Bank is not obligated to provide financial counseling, nor act in her best interest.
     
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