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TJ, Esq.
TJ, Esq., Attorney
Category: Real Estate Law
Satisfied Customers: 11783
Experience:  JD, MBA
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I accepted a home as trade for a partnership in my corporation.

Customer Question

I accepted a home as trade for a partnership in my corporation. The title was signed over to my company and as of today is listed in my companies name with the register of deeds and the local tax office. Now I find out that the previous home owner that signed it over to me was foreclosed on a few months later. I have a renter in the home that was served a notice to vacate today who is up in arms. I double checked with the register of deeds and the home is in fact listed in my companies name plus it shows a foreclosure under the guy who signed over to me the house was sold at auction to wells fargo bank after the home was signed over to my company by warrantee deed. Either way how can the bank take possession of the home at this point? Its still in my companies name which they either don't know or chose to ignore? Also what should I do about the notice to vacate?
Submitted: 3 years ago.
Category: Real Estate Law
Expert:  TJ, Esq. replied 3 years ago.
Hello and thank you for allowing me the opportunity to assist you.

Q: Either way how can the bank take possession of the home at this point? Its still in my companies name which they either don't know or chose to ignore? Also what should I do about the notice to vacate?

A: The bank can ignore because it doesn't matter whether the house was transferred to the company's name. The mortgage still had to be paid. If it wasn't paid, then the lender has the right to foreclose regardless of who owns the house. As for the renter, if he is a "bona fide" tenant, then he can stay until the lease expires. In this case, bona fide means that the tenancy was an arm's length transaction (i.e., not a relative of the prior owner), and that the rent is at a marketable rate. If the tenant is not bona fide, then he/she can be evicted.

Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, your positive feedback is much appreciated. Thank you for using our service!

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Customer: replied 3 years ago.

Sorry that really does not answer the question. It really deserves a bit more thought don't you think?


 


To be clear... Are you telling me that the bank can legally foreclose on a property/ take possession if it has no paperwork at all naming the current deed holders? Seems like they would need something tying them together.

Expert:  TJ, Esq. replied 3 years ago.
Hi again.

We may be having a misunderstanding, and perhaps I don't understand your question (as I thought that what I wrote answered it). I'll try to explain the law with an example:

Bob takes out a mortgage to buy a house. He gives the house to Dan, and the mortgage goes unpaid. In this scenario, the bank may foreclose. The fact that Bob gave the house to Dan has absolutely no impact on the bank's right to foreclose.

If you're asking whether the bank needs to inform Dan of the foreclosure, then I'd say that the answer is yes. But that is a clerical matter, and the failure to notify Dan will at best mean that notice will be given and the house will be sold again. And even that may not be necessary, as I have seen cases where the bank's attorney would point out to Dan that the best he could have done would be to pay $1 more than what the house was sold for at auction. So, if the bank got stuck buying back the house (which is almost always the case), then it can be offered to Dan for the price the bank paid plus $1. No harm no foul.

If that does not answer your question, then I am unclear what exactly you're asking. Perhaps you can clarify. I will be happy to continue helping.

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