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Did you not pull a final title check before closing?
Sadly, we were going through the process of obtaining a mortgage for over 2 months (we were told that it took so long due to the poor economy). Our attorney ran the title check in early October, and naturally, it checked out. The sellers are a husband and wife that flip properties, and my gut tells me that they didn't pay the mortgage because they figured that they would flip the property, and we took longer to close than they anticipated. Any idea what happens now? Would we have to go through the process all over again and try to buy the house from the former seller's bank? Will we be kicked out? Do we have a lawsuit?
thank goodness I live in California! good luck with you situation... sounds like you may be able to pick it up for even less now... if you haven't funded the deal and the money is with the attorney! Great... now get straight to the bank and offer a cash settlement (less than you did with the former seller) and tell them you will take it with no inspections, no appraisal contigency ... close in 10-12 days as fast as they can get title chain clear.. be prepared to pay their agent their commission... and your attorney, you did the last time no difference ... we just did this here in Calif - a once in a lifetime occourance... here at any rate... but do be prepared to pull your hair out as the banks settles the dust... they may not really even know who ownes the note.... and if it is Wall Street, it will take some time.. although if they have done the winterizing then you could be good to do... good luck!
ps start you bid a little low... you have some leverage right now on your side...
Certainly a lesson learned on pulling a preliminary title in the process and doing a final pull just a couple of days. Even in October something should have hit if they were in default. They must have been long-gone in the mortgage to take possession...were you aware they were in foreclosure? You have to be way past 90 these days for the bank to change the locks.
sorry
just
a couple of days [before closing]
Tiffany, this is great news and I hope that you're right! We had NO IDEA that they were in foreclosure - however once I spoke to sellers upon learning of what happened today, one of them accidentally blurted out "Joe (the mortgage broker) said they wouldn't change the locks!"...so I'm guessing that they aren't totally shocked by this. I just did a realtytrac search and the place was listed in the foreclosure section as of 9/2. Sigh.
Did they disclose this? Obviously not... Most contracts, no matter when in the process, Seller is required to disclose any new information that would adversely affect the property. I am no attorney, but this sounds like something that would "adversely affect the property".
Did they have an agent? This is definitely a disclosure item in any transaction I have been involved with.
You may be able to negotiate with the lender directly if you are speedy gonzales about it. However, you may be have some SERIOUS problems with your mortgage. I'm honestly shocked your mortgage company didn't demand a pre-close title pull. Your attorney may be in a bad ethical place too (*note: I am a law student, not a lawyer - for legal advice please consult an attorney)
Chutta - I am in agreement with you there. So basically, would you say that it is safe to assume that this is criminal activity on the seller's and possibly the broker's behalf? Also, can the seller's bank kick us out? Do I even own this property - when I bought it from someone on November 21st who had the property seized from them on October 30th?
You've already taken the right step in contacting your attorney. The attorney will give you the right course of actions based upon your contract as well as the laws of your state.
I would like to reiterate that I am not an attorney nor am I familiar with your contract or the laws in your state.
My point is that most contracts I've seen include a disclosure contingency, which runs with the contract and makes the point that Seller must disclose all material facts about the property no matter where in the process you are. Now, if that continency is not in your contract I am not sure what your recourse is, but your Attorney should have better insight with all the information.
Whether the violation is criminal or not I am not the right person to comment on that, but if the continency is in the contract then odds are they would have been required to disclose. by not disclosing they are in essence probably in some sort of breach.
you can pretty much go to the point that the seller was committing fraud... if your title report is corret as of Oct '08... they did not own the property... so you can't buy it from them... you can only purchase from the owner... if they (the new owner)have changed the locks... they have an agent already... go to them, you will waste time looking for the bank, the agent already knows the bank... if they did the winterizing there should be a notice on a window somewhere... for incase of emergency? we do that in Calif at least... contact that agency... or better yet have your attorney contract... I am not sure what your attornies do on the transaction... not pull title though I see... but again go back and negoc the deal with the new owner/list agent and get a reduced price.... this could be a blessing if you approach it right and keep your head straight... focus... if you want to go after the org seller do so with your district attorney... it is fraud... most likely civil... don't know about your area and I am not an attorney, but a real estate broker... the only thing you can do is go for monitary.... but if you get your place for $75,000 less now.(example)...find the silver lining and let the county do the rest.... good luck
I would say you probably do not own the property. Check with a lawyer...how confident are you in your lawyer? I'm not saying he's done some sort of malpractice, but not catching a property seizure a 3 weeks before closing....that would definitely drop my confidence. Hop on it lightening fast. Do you have a copy of the seizure papers? There should be contact info on the county web page that you can look up for whomever the property owner is.
Like I said before, the biggest issue may be your mortgage company. They just cut a big check on your behalf and have no security. You are stuck in a funny place with this. It will probably take them a few business days to realize they haven't got the loan secured. You have 2 choices: fess up and hope they are understanding (which is probably unlikely in this market) or try to get a solution together for them in the next business day and call them with a solution (best choice in my opinion, but you will probably have to drop everything to get this accomplished and it still may not get you the house). I'll try to pull over some mortgage folks to this thread to give you input.
Criminal activity? My guess is not, maybe a civil action, but not worth time and energy to pursue since they probably can't actually get you the house. You could probably chase them for your costs, but unless they are huge it would likely cost you the same in legal fees to go after them and obviously they don't have the money to pay you even if you get a judgment. Let karma get 'em. (But if they are professional "flippers", they should be reported to whatever the relevant authority is in N to prevent a repeat performance)
Again, in law school, but not a lawyer...consult a lawyer for any legal advice.
It may be difficult to prove fraud. When the seller makes a comment like "one of them accidentally blurted out 'Joe (the mortgage broker) said they wouldn't change the locks!'..." it makes them sound like they knew about it but perhaps didn't grasp the reprocussions, especially if they did not have representation it might be a hard sell. And obviously, they don't have money to pay a judgment anyhow.
[insert you can't get blood from a turnip and above referenced "not a lawyer" clause]
More questions...
1) Did the seller have representation (agent/lawyer/etc)?
2) Did the mortgage fund to escrow (not to the seller, does your lawyer have it)?
3) Did you have an agent?
I am not licensed in NY. I'm pretty sure my supervising attorney has a NY licensed real estate license, so if you don't have a resolution by Monday - then I can run it by him.
run Forest run!
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Since January 2009
Wow.....whoever closed that loan is on the hook. As far as I know a title run down is done just prior to recording (at least in MA). For this to actually close, the foreclosure could have been approved in court but the deed not recorded...maybe.
I might contact the bank that you obtained your mortgage through and get them involved. If I am not mistaken Title in NY is done by the Seller's attorney...That would make me nervous.
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Thank you for all of this feedback! To answer your inquiry - the sellers do indeed have a lawyer, I'm not sure if the mortgage funded to escrow but I do know that our attorney hasn't issued any payout yet, and we were not working with an agent. Also - we got an FHA loan - not sure if that makes any difference but figured that I would throw that out there. I have been doing some research online and I read that it is possible that if the bank knows that the property is vacant then they will often change the locks while the property is still in the pre-foreclosure stage....is this true? Also, what do I have to do/ who do I contact to de-winterize the house?
Pre-foreclosure should have been detected in the title search. Sounds like your attorney has some explaining to do. Do you know if your purchase price will cover your seller's (former) mortgage? I would also double check the title for other issues such as unpaid RE taxes. This situation may be recitifiable. Your attorney needs to get in touch with the bank's representatives and find out what numbers are at issue, and if a deal can be done. It is very fortunate that you discovered this situation before the checks were cut.
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Just closed on a home yesterday and found that it was seized by the bank on Oct. 30th today...
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I closed on a home in Staten Island, NY yesterday, and was very shocked when the key didn't work when I attempted to begin moving in today. I was told to call a locksmith when I contacted the former owners, and upon break-in via the locksmith I learned that the house had been "winterized" and the former seller's bank had seized the property and changed the locks as of October 30th. I already contact my attorney who has vowed to get on this ASAP (and thankfully hasn't cut any checks to the sellers yet) - however I am beyond confused. If anyone can share any insight/ advice, it would be greatly appreciated.
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