Lease/Option buy out .....

[Notorial dissent]

Originally Posted by gldskr

ND

Why do you keep calling Codee Fossil?



Apparently you don't understand how contracts work. A mortgage is a contract. Just because it says "mortgage" doesn't magically give it superior standing. The lease option is subordinate to the first mortgage only. Although the details of the contract have not been provided I can only assume that he determined the equity to be sufficient to secure his deposit. Only a moron would put down 20K otherwise.

It is the second mortgagee who the fraud was commited against. He is the one who is SOL and will have to sue the seller. The title company is liable only for encumbrances of record. So if the lease/option was recorded the title company would know about it and the second mortgagee would be aware of their third place standing. They make the mortgage subject to the lease/option. If the lease /option was not recorded, it still has superior standing over the second, but the title company is indemnified from its effect.

Codee's 20k is still secure.

BTW, what is good title insurance, aren't they all the same?

gldskr

I don’t think Fossil is Codee, for one thing their writing style is different.

Apparently YOU don’t understand how a mortgage works. It is in a sense a contract, but it is of a different nature, and the lease option is not superior to the mortgages, if they, or the trust deeds, have been properly recorded, the least option will have the same standing as a third or fourth mortgage, in other words, out in the wind.

I would certainly hope the property is worth the down, and then some, otherwise it has been a waste of time.

You are correct, about the mortgages, if the lease was recorded, it most likely was not.
The law is first in line at the recorder’s, and if the TD’s are there and the lease is not they take precedence, and even at that I doubt the lease can be enforced if the property is in foreclosure.

The problem with contracts is that if you have to enforce them, there has to be something to enforce them against, and if the owner is in foreclosure or files bankruptcy, all bets are off.

What makes you think the $20K is secure? If the bozo defaulted on his second, he most likely defaulted on the first, and any money he had is long gone.

In theory they are all equal, but there are some companies I will not deal with.

[Extramural]

Originally Posted by Fossil Rock

Any suggestions where I should begin?

What course/method should I take?

Should I use an attorney?

He isn't aware that I know he has breached the contract yet.

D.

First thing to do is to file a Lis Pendens on the property.

Then, you must notice the landlord that you know of his breach, preferably by registered mail.

At the same time, serve him with a copy of the Lis Pendens. This, at the very least, gives all parties of the breach and the pending litigation.

Then, you have your work cut out for you, should you choose not to hire a shyster.

As ScoobyDoo says, ROSARUCK!

[gldskr]

ND

Codee is a chameleon, he exhibits many writing styles to befuddle his readers. Within these styles, however, he displays various "tells", revealing his true identity. His personas range from village idiot to law general and everything in between. Misdirection is his MO.

In our current example we have a fellow who appears to have a modicum of sophistication by using a lease/option as an investment vehicle. He risks 20K of his capital but fails to record the contract, not wise but still not fatal. He has an iron clad contract that secures his investment and standing.

"The Landlord/Seller shall not lease to any other third party, nor to assign, sell, option, transfer, pledge, or otherwise to convey any or all rights or interests had by Landlord/Seller in the Property or in this Lease/Option, nor to further encumber the Property nor allow the same to occur. Violation of this paragraph shall be considered a material breach of this Lease/Option. The Landlord/ Seller further agrees to keep all mortgages, liens, taxes, or other encumbrances on the Property, current and in good standing, Tenant/Buyer shall have the right to make payment on same in the event that Landlord/Seller becomes delinquent or otherwise defaults on such payments, and Tenant/Buyer may at its option either reduce its monthly rent in the amount of the payments, or subtract the amount of the payments from the balance due Landlord/Seller at closing of the sale of the Property."

He then presents an inane situation with equally inane solutions and solicits the infinite wisdom of the membership to illeviate his predicament. The sophisticated investor has become the village idiot. A likely scenario? I highly doubt it.

Back to the situation.

Recording of a contract does not give it precedence or special standing over other contracts and caveat emptor still applies. Recording is merely the publishing of preexisting rights and obligations and in no way can affect the standing of those rights and obligations.

I would confidently wager that there is a clause in the new refi mortgage that requires the mortgagor to disclose all encumbrances of record or otherwise.

The landlord has now commited fraud against the new lender. He has breached the contract with Codee. The original lender is now out of the loop.

When it is all said and done and the property is liquidated, Codee is in first position and will be able to recover his 20K. Or he can exercise the option according to its terms and acquire title free and clear. The new lender is SOL and will have to sue independent of Codee's contract.

Codee can sue based upon breach, whereas the new lender would sue based upon fraud. Two entirely different scenarios with entirely different remedies.

Good exercise Codee. You are not a total a$$hole but only mostly so.

gldskr

[Fossil Rock]

Originally Posted by gldskr

Codee is a chameleon, he exhibits many writing styles to befuddle his readers. Within these styles, however, he displays various "tells", revealing his true identity. His personas range from village idiot to law general and everything in between. Misdirection is his MO.

I am NOT Codee, and I do not know who Codee is.

Originally Posted by gldskr

In our current example we have a fellow who appears to have a modicum of sophistication by using a lease/option as an investment vehicle. He risks 20K of his capital but fails to record the contract, not wise but still not fatal. He has an iron clad contract that secures his investment and standing.

I agree it wasn't smart, I just didn't think of it at the time.

Originally Posted by gldskr

He then presents an inane situation with equally inane solutions and solicits the infinite wisdom of the membership to illeviate his predicament. The sophisticated investor has become the village idiot. A likely scenario? I highly doubt it.

Prove it's inane, contract law has nothing to do with opinion. If I make an offer and you accept and honor it then it is fact and it can't be (successfully) disputed - period.

If you accept and dishonor it you WILL pay the penalty, again ... fact. A contract is a contract. Commercial law is nothing more than contracts.

My goal is to do this in such a way as it won't or can't end up in court.

Originally Posted by gldskr

Back to the situation.

Recording of a contract does not give it precedence or special standing over other contracts and caveat emptor still applies. Recording is merely the publishing of preexisting rights and obligations and in no way can affect the standing of those rights and obligations.

I would confidently wager that there is a clause in the new refi mortgage that requires the mortgagor to disclose all encumbrances of record or otherwise.

The landlord has now commited fraud against the new lender. He has breached the contract with Codee. The original lender is now out of the loop.

When it is all said and done and the property is liquidated, Codee is in first position and will be able to recover his 20K. Or he can exercise the option according to its terms and acquire title free and clear. The new lender is SOL and will have to sue independent of Codee's contract.

Codee can sue based upon breach, whereas the new lender would sue based upon fraud. Two entirely different scenarios with entirely different remedies.

Good information, I suppose I need to get a lieyer to inform me of my options for remedy.

Originally Posted by gldskr

Good exercise Codee. You are not a total a$$hole but only mostly so.

I'll let Codee know that the next time I see him/her. In the mean time, please refer to me as Fossil or Fossil Rock.

[charlesa6]

My goal is to do this in such a way as it won't or can't end up in court.

That's why you need to talk to him like I mention before, is not stupid person. Talk to him like adult and adult for settlement and closure before any litigation. Filing anything right now, you are creating red flags for the other party to use against you in the court of law.

[Notorial dissent]

Originally Posted by gldskr

ND

Codee is a chameleon, he exhibits many writing styles to befuddle his readers. Within these styles, however, he displays various "tells", revealing his true identity. His personas range from village idiot to law general and everything in between. Misdirection is his MO.

In our current example we have a fellow who appears to have a modicum of sophistication by using a lease/option as an investment vehicle. He risks 20K of his capital but fails to record the contract, not wise but still not fatal. He has an iron clad contract that secures his investment and standing.



He then presents an inane situation with equally inane solutions and solicits the infinite wisdom of the membership to illeviate his predicament. The sophisticated investor has become the village idiot. A likely scenario? I highly doubt it.

Back to the situation.

Recording of a contract does not give it precedence or special standing over other contracts and caveat emptor still applies. Recording is merely the publishing of preexisting rights and obligations and in no way can affect the standing of those rights and obligations.
Actually, the recordation does give them legal priority and the mortgage lien will take precedence over an option.

I would confidently wager that there is a clause in the new refi mortgage that requires the mortgagor to disclose all encumbrances of record or otherwise.
Most likely, however, since the mortgage is in foreclosure it makes little real difference, they are still going to foreclose.

The landlord has now commited fraud against the new lender. He has breached the contract with Codee. The original lender is now out of the loop.
True again, it still won’t alter the fct that it is in foreclosure, and if the 2nd is foreclosing the 1st will as well to protect their interest, and their rights come first.

When it is all said and done and the property is liquidated, Codee is in first position and will be able to recover his 20K. Or he can exercise the option according to its terms and acquire title free and clear. The new lender is SOL and will have to sue independent of Codee's contract.
When all is said and done, Fossil is in dead 4th place and will get nothing regardless. His agreement was with the landlord, and the lenders have no obligation to care one way or the other. They will foreclose on and sell the property to cover their liens, and since they weren’t a party to the lease option, Fossil’s only option is to go back against the landlord and hope he has something to sue for. My bet is he won’t.

Codee can sue based upon breach, whereas the new lender would sue based upon fraud. Two entirely different scenarios with entirely different remedies.
True again, but the landlord has to have something to sue against to make it worth the effort. I’m betting he won’t have two dimes to rub together. The holder of the first will foreclose in any event, and their claim will come first, and if anything is left it will go to the 2nd. That is how the laws are written.

Good exercise Codee. You are not a total a$$hole but only mostly so.

gldskr

***************

[charlesa6]

Yea, the first lien holder can foreclose, and strip out the second and third holders in the list.

[Extramural]

Originally Posted by charlesa6

Yea, the first lien holder can foreclose, and strip out the second and third holders in the list.

Yep. You right Charlse.

[Fossil Rock]

There is no foreclosure at this point, he just refinanced at the end of March. He probably hasn't even made his first payment yet.

[Extramural]

Did you file a Lis Pendens yet?