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mkc1959, Lawyer
Category: Real Estate Law
Satisfied Customers: 616
Experience:  Practicing attorney with 26 years of experience.
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If I purchase a non performing note, can I then foreclose on

Customer Question

If I purchase a non performing note, can I then foreclose on the property and take possession?
The home has been vacant for about 10 years since being abandoned in a bankruptcy.
I have located the note holder and they have sent me the forms required to submit an offer to purchase the note.
Submitted: 7 months ago.
Category: Real Estate Law
Expert:  mkc1959 replied 7 months ago.

I do not believe you would be able to enforce the promissory note or foreclose it against the property. The statute of limitations to enforce the promissory note in Nebraska is 5 years. From your recitation, it appears no payment has been made on the note for at least 10 years.

If the statute of limitations has expired, then the debt cannot be enforced and the lien could also not be enforced. If this is the case, then the proper person or persons to contact would be the original borrowers. Title to the property could possibly be obtained from them.

It is possible that the effect of the bankruptcy was to transfer "title" of the property back to the lender. This would be unusual, but is still possible. So, my answer is contingent upon someone's review of the bankruptcy to determine if title was reconveyed to the lender.

Please let me know what follow up questions you may have.

Customer: replied 7 months ago.
From what research I've been able to find, it appears the debtors intent was to surrender the property back to the lender(s). The value of the 1st and 2nd mortgage exceeded the value.
The County Assessors records still show the previous owners as being the current owners even though they abandoned the home assuming is was taken back by the bank through the bankruptcy case.
I was able to locate the previous owners. They are extremely unwilling to even discuss the property. They say they are constantly asked by people to sell them the house, but have been advised by their bankruptcy attorney to not do or sign anything, as it is not theirs to sell.
What would you advise I do to acquire the property?
Expert:  mkc1959 replied 7 months ago.
Unless the title was somehow actually transferred to the lenders at the time of the bankruptcy, I do not believe it would do any good to try and make any deal with the lenders. Do you know if the taxes are being paid?Have you had an attorney review the bankruptcy file?
Customer: replied 7 months ago.
Taxes are current. I assume the lender is paying those but I have not been able to confirm that.
I have not had an attorney review the file. However, I did some research on, and it appears that the statute of limitations for real estate secured notes is 10 years, rather than 5 on other notes.
The bankruptcy happened in 2008 so it should still be good.
Do you offer the services of reviewing the file, and can you provide an estimated cost for doing so?
Expert:  mkc1959 replied 7 months ago.
The 10 year statute of limitations is good news. Buying the note and mortgage could allow you to foreclose and become the owner. I can make an offer to review the file through Justanswer. I need to follow up with that specific procedure in the morning as I need to figure out Justanswer's specific policies and procedures for doing so.

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