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Ask Law Educator, Esq. Your Own Question
Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 111657
Experience:  Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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I am a real estate investor. I was granted a deed to a

Customer Question

I am a real estate investor. I was granted a deed to a property by a Trust. The deed was in the Trust name however the mortgage was is in another name (he has become adversarial) he wants to be paid a sum of money in a certain time frame. Does he have any leverage in this matter?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  KimberlyLaw replied 1 year ago.

Hello, I am happy to assist you today.

Although you are not personally liable on the mortgage, of course, that mortgage is secured by the property, and when that property is transferred, the mortgage is supposed to be paid off by law. So he has a very strong position, and can take you to court for payment, or enforce his security interest on the property by foreclosing.

Best bet is to work out a payment plan or something. He will have to be a little bit flexible if you don't have the cash on hand, because it is reasonable for you to take the time to get a loan on the property and take out equity to pay him. He should be patient and agree to wait for this because it saves him a LOT of money on legal fees trying to come after you. I think you can work it out.

Kim

Customer: replied 1 year ago.
Hi KimI need to provide you with more information. This gentlemen had assisted a real estate broker and tax consultant several years ago in a short sale on subject property there purpose was to have him buy it but allow the then existing owner to buy it back from him. The tax consultant constructed documents for him so that he would qualify for a loan to purchased the short sale. The strategy was for original owner to keep possession of the property. In other words the realtor, tax man and the now mortgagor concocted a plan to make this happen. The original owner always paid the monthly notes to the lendera (presently Wells Fargo). The original owner has the receipts to reflect this. At some point in time the tax consultant had a fall out with the now mortgagor. Subsequently in 2014 for sum reason the now mortgagor quit deeded the property over to the original owners living trust.
This seems to have prompted the now mortgagor to request this year 2015 that the mortgage be taken out of his name. Even though the deed had been out of his name since April 2014.
Customer: replied 1 year ago.
Hello Kim,
I was slow to give you a reply because I was using the text system on my cell. However I can reply much faster since I am now using my laptop (it allows me to type faster).
Customer: replied 1 year ago.
The original owner is a personal friend of mine and I am now his power of attorney. He ask me to help in this situation. He does not live at this property but he has a transitional home for reintries. I told him that my real investment company would take this responsibility of owning the home with the stipulation that he could not purchase the property but would be able to enter into a long time lease with my company.The now present mortgagor wants to be paid to have his name removed from the note. I tentatively agreed to make that happen but then back out because he wanted to be paid before I can have the property refinanced. It has always been my position that he was not entitled to any funds from my side since he had not incurred a loss. He says that he has because of the income taxes he has been charged for income he never had. I acquiecsed and came to an agreement but later withdrew that agreement because of his pressing of when he should get paid.
Customer: replied 1 year ago.
Please keep in mind it is not the Trust that holds is on the note. But it is the Trust that has granted deeded my company. My company has recorded a grant deed and is now applying for refinancing of the property.
Customer: replied 1 year ago.
The original owner is the trustee and power of attorney of the trust.
Expert:  Law Educator, Esq. replied 1 year ago.

Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

Your previous expert has opted out and had to leave. I am a DIFFERENT CONTRIBUTOR.

Does the finance company that held the mortgage still retain their lien on the property? They have not executed a waiver or release of the lien, correct?

The mortgagor still has ownership of the note on the property?

Customer: replied 1 year ago.
Sorry to reply so late. I was not aware that you had responded to my last reply.Yes the finance company still has a lien on the property. The mortgagor still owns the note but has never paid against it. All monies for the note have always been paid by the original owner up to this month. My company will take over monthly payments starting next month.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
The issue here is that the mortgagor has the note so you need to get that note cancelled. The mortgagor is going to argue he has a right to compensation for bearing the risk on the note, but if you can prove that he has never had to pay on the note the amount of compensation would be low. The issue is what that compensation would be worth to him and that is subject to negotiations. As long as he has his name on the note and has liability he can stop the deal, so you would need to deal with him and make some offer to buy him out of the note and pay off the note itself to remove him from the note.
If he refuses reasonable compensation for buying him out of the note, then you are going to have to take him to court, because he cannot unreasonably refuse to release the note upon you buying out the note and paying it off.
So you need to start here by offering a reasonable amount to buy him out for taking risk and keeping his name on the note, but if he refuses you need to arrange for a new loan and take him to court for refusing to release his name from the note unreasonably, since the owner still has been paying the note and you have proof of that.

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