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socrateaser
socrateaser, Lawyer
Category: Real Estate Law
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Experience:  Attorney and Real Estate broker -- Retired (mostly)
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I am a real estate broker of 10 years. As buyers, my wife

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I am a real estate broker of 10 years. As buyers, my wife and I entered into a fully executed real estate contract with HUD who had the property conveyed to them from PNC as a FHA foreclosure where we bid on it. After our bid was accepted and the contract executed, we were given notification that the contract was cancelled by HUD and they sent us back our earnest money. The contract was cancelled because they did not do due diligence with title work to make sure the manufactured home was titled (retired) as real estate before they listed it. We are just going for the 3 acre piece of land to rebuild on it because of its location. We could care less about the title issue but we were told it needed to be resolved. We were told by the asset manager that we would have first rights if the issue was resolved in 90 days. 2 months later, the property couldn't be found in their system and we found out it was conveyed back to PNC. 9 months later, we are still waiting to buy this piece of land, hoping that it will come back on the market, but we don't want to rebid on it since we already had an agreement. We want to expedite our purchase of the land and need to know how to proceed so we don't have to wait on them or face the prospect of having to compete for it again in an even more competitive market/time of year.
Hello,

The problem here is that your purchase contract was voided for lack of subject matter. That is, HUD attempted to sell you a property that it was not "seized of" (did not own) at the time of contract making. You could sue HUD for negligent misrepresentation, under the Federal Tort Claims Act.

However, your claim may be time-barred at this point, because more than six months has passed and it may be argued that you failed to make a timely formal demand for damages associated with your claim. Your rebuttal argument would be that HUD's continuing misrepresentations about the property caused you to delay, so that the time to claim should be "tolled" (suspended) in your favor.

If you want to pursue this claim, you will need a lawyer with government claims experience. There is no other way to force the issue.

Please let me know if I can be of further assistance.
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Customer: replied 3 years ago.

My understanding from HUD's asset manager (HUDPEMCO) is that PNC should have resolved any title issues before conveying it to HUD who sold it to me through their asset manager (HUDPEMCO). HUD had title to the property when (on their behalf), HUDPEMCO/HUD entered the contract with us. The manufactured home was considered personal property because it didn't have its DMV title retired yet. My understanding in real estate is that any personal property left with real property is conveyed to the new owner if left there. Why couldn't we close...Well the title company said that technically, they intended to sell the home plus the land. The manufactured home is titled like a vehicle through the DMV until retired as real estate. This is the reason the contract was cancelled. The DMV still showed it as a vehicle and the title search indicated it was not deeded as real estate yet. Shouldn't PNC have cleared this before conveying the entire real property to HUD? Couldn't my claim be against PNC as well?.

My understanding in real estate is that any personal property left with real property is conveyed to the new owner if left there.

A: Personal property permanently affixed to the land is deemed the real property of the owner. Personal property left on the land by a former owner is generally considered abandoned. Personal property that has registered title is not automatically abandoned. A manufactured/mobile home is a motor vehicle, and has a certificate of title. It is not automatically abandoned to a new owner of real property. parked in the facility.

Why couldn't we close...Well the title company said that technically, they intended to sell the home plus the land. The manufactured home is titled like a vehicle through the DMV until retired as real estate. This is the reason the contract was canceled. The DMV still showed it as a vehicle and the title search indicated it was not deeded as real estate yet. Shouldn't PNC have cleared this before conveying the entire real property to HUD? Couldn't my claim be against PNC as well?.

A: What parties "should" do is frequently quite different from what they must do.

HUD's cancellation was unilateral -- you weren't asked to consent. You could sue for contract damages and claim that HUD breached the contract by not being seized of title to the property. Yes, you could sue HUD and PNC for negligent misrepresentation as part of the same legal action, but because your contract was with HUD, not PNC, it could be argued that PNC promised nothing to you, so it cannot be held liable for a misrepresentation, whether intentional, negligent or innocent.

So, the claim against PNC, in my view, is weaker than that which may apply to HUD.

Please let me know if my answer is helpful to you. The website has been experiencing systematic problems lately -- consequently many customers are not receiving my answers.

Thanks again.

Customer: replied 3 years ago.

Thanks that was helpful and made sense. This is my last question/point of clarification. I looked over the HUD sales contract. It reads the following in fine print...


 


D. Seller may rescind this contract and return all or a portion of


Purchaser's earnest money deposit under the following conditions:


1. Seller has not acquired the property.


2. Seller is unable or unwilling to remove valid objections to the title


prior to closing.


3. Seller determines that purchaser is not an acceptable borrower.


Tender of the deposit shall release the Seller from any and all claims


arising from this transaction.


 


Do any of these terms or conditions negate my ability to be successful with a claim or file a lis pendens regarding the property...

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