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We have a land contract that we need to foreclose on, we live

out of state and are...
we have a land contract that we need to foreclose on, we live out of state and are trying to do this by phone. The legal fees seem really high ($10,000 retainer), long process. Why is a person allowed to live ain a house they haven't made any payments on for months?
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Answered in 3 hours by:
5/1/2015
Dimitry Esquire
Dimitry Esquire, Attorney
Category: Real Estate Law
Satisfied Customers: 41,221
Experience: JA Mentor, multiple jurisdictions, specialize in business/contract disputes, estate creation & admin
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Thank you for your question. Please permit me to assist you with your concerns.
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If I may ask, is this the primary residence of the other party?
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Customer reply replied 2 years ago

He would claim yes.

The short answer is that at this point in time, the courts tend to favor court-ordered eviction rather than 'self help' where the landlord/owner evicts on his/her own, such as by lockout or by forcible eviction. The courts want to review the cause and reason for the eviction, whether it is for 'good cause' and it is not retaliatory in nature. Since the process to evict can indeed take months, until the courts formally rule, the tenant is permitted to remain on the premises. This is a bit of an over-correction in law since in the past landlords have been known to kick tenants out for good cause (or without good cause) without any advance warning or time, and would bar recourse for the tenant for injuries, even where the eviction was not valid in nature.
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Customer reply replied 2 years ago

Oh sorry, I should have explained that we are already aware of the difficult process in NY.

My questions would be about foreclosure of a land contract (attorney prepared) that is literally years in default plus we (sellers) had to buy back the property deed from the county due to back taxes and the purchaser also defaults on property insurance.

Since we know the purchaser is in serious breach of contract can we not pursue that rather than foreclosure/eviction.

My apologies if I misunderstood you. Just to be clear, you wish to know if you can just buy the property from the state?
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Customer reply replied 2 years ago

No, we already own the property, the deed is in our name. The purchaser has a land contract, his name would go on the deed after contract paid in full.

A 'mortgage' puts the name of the purchaser on the deed in the beginning.....since that is not the case can we bypass the foreclosure and go to eviction ?

The land contract states in item 10. Default ...."Purchaser shall quit and remove from the premises and any and all payments received by the Purchaser shall be deemed rent".

If you already own the property, there is nothing to foreclose upon--a foreclosure happens only if the property is not under your name but you have a lien against it via the mortgage. Hence you can simply evict as you own the property yourselves. Hope that helps!
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Customer reply replied 2 years ago

Please look at NY real estate law....I'm seeing something different

One moment. I am reviewing.
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Customer reply replied 2 years ago

Waiting for your answer before doing a rating....

My apologies on the delay. Based on my review if title never passed on to the other party but instead was held by you, you are still the de-facto landowners who are able to formally evict. On the other hand if you structured this agreement as a mortgage where you retained the title until paid off in full, then foreclosure is required first because this is no longer a lease but a mortgage lender relationship. Sincerely, ***** *****
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Customer reply replied 2 years ago

Thank you for working on Sunday.....

so....."structured this agreement as a mortgage" ...what constitutes a 'mortgage' ?

The purchasers signed a 7 page Land Contract with a monthly scheduled payment for a period of 12 years at 6%. However in this contract under 'Default' it discusses "Owner to foreclose Land Contract" not "foreclose mortgage".

How can there be a mortgage on something they don't own ?

New York State appears to deal with this whole thing differently.

My pleasure, truly. I would not have left this issue even on the weekend if you still had questions. How exactly is the scheduled payment listed? At the end of the 12 years the parties receive clear title to the property?
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Customer reply replied 2 years ago

I hope the following as pulled from the Land Contract will help......

AGREEMENT (Land Contract)

1. REAL PROPERTY:

PERSONAL PROPERTY

2. PRICE

3. PAYMENT OF PURCHASE PRICE

as follows:

A. down payment

B. payment of the sum, or more, each and every month

+++++++++ and all balances of principal indebtedness: ... and all balances of principal and interest then remaining ... unpaid shall be due and payable on the 25th day of March ... 2018.

5. DELIVERY OF DEED:

Upon payment of the above purchase price, the Owner shall . deliver to the Purchaser a Warranty Deed with lien covenant . conveying good and marketable title in fee simple free and . . clear of all encumbrances.

Under item

10. DEFAULT

clearly states that the Purchasers will "quit and remove" if

they are in default of the terms (several) and also assigned

legal fees. I mention these terms because they go beyond

'normal' mortgage verbiage.

I will not be back at the computer till late am tomorrow so there is no hurry.

Thank you,

Tania

Hi Tania, This would be seen as being closer to a mortgage then a lease--the reason being is that the Owner holds the deed but is required to deliver it upon payment--it is essentially a lien. Hence that would require foreclosure under state laws and not just an eviction because the other parties have an equity interest in the property. I am sorry about that, but based on the verbiage, the process of foreclosure is controlling. Sincerely, ***** *****
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Customer reply replied 2 years ago

There seems to be different opinions about foreclosing....

The DEED transfers party to party in a Purchase Money mortgage, it does NOT in a contract for deed transaction. Another thing about Purchase Money Mortgage Instruments, they are difficult to enforce if the need arises because they generally are a junior lien subordinate to a superior lien. Any purchase money mortgages I’ve ever worked with were very small and generally for a short time frame. A Contract for Deed is exactly what it is, the purchaser must perform under the rules of the contract before the deed is transferred. As a Seller’s Broker I always would suggest not using the PMM if at all possible because they are generally a nightmare to litigate if there is a default. Contract for deed would be the lessor of two evils, in my opinion. People can walk away from difficult times much easier with a Contract for Deed. You do not foreclose on a contract for deed, if you litigate you litigate on grounds of breach not so with a PMM you simply must foreclose which can be a real head ache when you are in a junior position. Also a PMM is a NON INSTITUTIONAL PRODUCT where as a second mortgage IS. Very important.

Would this not follow for New York ? Contract for Deed is the same as Land Contract and the above describes our situation.

It does not follow for New York because in New York if a tenant is unwilling to leave, he is treated as a de-facto owner under a Contract for Deed...which then requires an actual foreclosure instead. I understand your position and absolutely understand the difference between a contract for deed, a lien, or a land contract, but in this instance seeing foreclosure on the basis that the the other party may be an equity interest in the property is the correct method to pursue. Sincerely, ***** *****
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Customer reply replied 2 years ago

Thank you.

It was our mistake to go with a Land Contract in New York and I'm disappointed with the firm that did the contract for us.

Sadly we are looking at 2 years to complete the foreclosure then eviction.

Since the property in question is the final asset of a Trust we may 'abandon' the title to the county for back taxes which will happen next year. Is there a liability to the beneficiaries of the trust in that case.

Have patience, I'm about worn out. Embarassed

I have tons of patience, no issue :) And no, beneficiaries DO NOT have liability because a beneficiary simply receives the benefit and not the debt of an asset upon transfer. if you choose to abandon, the bene loses their interest in the asset but does not obtain the debt. Sincerely, ***** *****
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Customer reply replied 2 years ago

Well, that's good news. One would expect that to be the case but this experience has me double checking everything.

One last attempt to get out from under this mess will be to sell the Land Contract ASAP at a break even price to someone who has the time/money to go through the process.

Thank you.

Tania

Tania, My pleasure! And yes, that is not a bad option. Since real estate values are finally creeping back up, this might be a profitable venture down the line to a potential buyer.Good luck to all of you and please take care. Should you need me again, please do not hesitate to request me again by name. Otherwise, if satisfied, kindly do not forget to positively rate. Thank you! Sincerely, ***** *****
Dimitry Esquire
Dimitry Esquire, Attorney
Category: Real Estate Law
Satisfied Customers: 41,221
Experience: JA Mentor, multiple jurisdictions, specialize in business/contract disputes, estate creation & admin
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