the history
Names and locations have been changed to protect privacy. The widow, Paula Raymond, was 84 years old and was feeling the effects of aging. She had been living alone after her husband’s death in 2009. She lived in the same 60-year-old house they bought 55 years ago, in 1954. The house hadn’t been renovated since its purchase, needed repairs, and was now too big. for her. He decided to give it to his only grandson, Jack, who was 22 years old. Paula, being frugal, bought a resignation writing form at the stationery store, filled in the blanks, and presented it to Jack. He took it to court and had it recorded.
Shortly after that, in 2009, Paula moved into an assisted living facility. Jack decided to modernize the house and then sell it. It obtained construction offers from three reputable contractors and accepted an offer of $ 75,000. Jack’s father, Robert, agreed to loan Jack $ 75,000 which was evidenced by a promissory note secured by a mortgage on the property. Robert agreed to become a financial partner for the project. His plan was to do first-class modernization work and sell for a profit. This was in the spring of 2010.
Jack went online and downloaded a blank promissory note and mortgage form, filled them out, executed them, gave Robert the foreclosed note, and registered the mortgage. Four months later, modernization work was completed and the property was listed with a local real estate agent for $ 450,000. After being on the market for 60 days, it was hired at the full list price. The real estate agent arranged the closing with a local title insurance company. A title insurance compromise was ordered.
Title issues are discovered
When Paula and her husband bought the property in 1954, they closed the transaction with the seller themselves; there were no title insurance companies in the community. Up-to-date information on the property’s title had not been obtained for 56 years. The title compromise ordered in 2010 showed numerous title issues. Jack, Robert, and the real estate agent faced the following issues set forth in the 2010 Title Compromise:
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The deed transmitting the title to Paula and her husband was not notarized.
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When Paula and her husband bought, there was an unpublished mortgage on file that the sellers owed.
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When Paula and her husband bought, there was an unprecedented judgment bond that the sellers owed.
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A new study showed that the winding road from the main road to the house encroached on a neighboring parcel of land.
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A re-inspection showed that the storage shed at the rear of the property and the rear fence of the property encroached on another neighboring parcel of land.
Title issues are resolved
The buyers’ attorney reviewed the Title Compromise; He advised his clients to exercise an escape clause in the purchase contract and to rescind the contract. Now Jack and Robert owned a recently remodeled vacant $ 450,000 home; I had a $ 75,000 promissory note and mortgage; it couldn’t be sold until five complex title problems were solved. In addition to title problems, the general housing market and local property values were declining.
To resolve the five title issues, it required hiring a local attorney who had to negotiate with several other attorneys representing the other contiguous owners to resolve the encroachment issues. It also had to do a silent title action to remove the defects caused by unpublished links.
It took eighteen months and $ 24,000 in legal fees and costs to resolve the five title problems. In early 2013, the property was re-listed for sale. Its market value had decreased 15% during the time it was off the market: from $ 450,000 to $ 382,500, a decrease of $ 67,500. During the eighteen months that the property was vacant, taxes, insurance, lawn care, and heating and lighting costs totaled $ 2,600. When the property was finally under contract, the buyer was unable to qualify for a bank loan. Jack and Robert decided to provide the buyer with financing for the seller. They held the loan for five years at 5.0% interest.
The total cost of the poorly managed securities issues was a decrease in sales revenue of $ 94,100 and it received no cash from the sale for five years.
conclusion
Honest and well-meaning people who apply common sense procedures to technical legal matters can inadvertently destroy values. Not knowing what one does not know results in a costly learning experience.