Q: I have a contract to buy a foreclosed property and am ready to close. On the closing date, it was discovered that the home had an outstanding lien. The lender, Bank of America, doesn’t want to pay the lien. What rights do I have? I know if I don’t close, I lose my deposit, but what is the bank responsible for here? – Enrique
A: Good news. You should have no problem getting your deposit back in this case. As we have discussed before, in a transaction to purchase a property, the contract is king. So review your contract carefully to see what it says about this situation. If your contract reads like most bank-owned sales contracts, it will be very one-sided in favor of the bank and allow the bank to cancel your transaction for just about any reason, with no repercussions. In your case, I would be willing to bet that the contract does require the bank to pass clear title to you, so it will need to either pay off the lien or cancel the contract. It most likely can’t make you pay the lien or accept the property with defective title.
Q: My husband and I have a contract to buy a short sale for a bank-agreed price. The mortgage is in the seller’s (wife) name. It is her primary residence. The seller is in the middle of a divorce, and the estranged husband has skipped town. Will we be able to close on this property without his appearance and signature? What will happen to this property if the husband never surfaces? – Linda
A: If the property is the seller’s primary residence (homestead) and/or the soon-to-be-ex-husband is also on the title, you will absolutely need him to close on the deal. You need to get a handle on this situation before you invest any more time in this house. The only hope is to try to get the divorce court to order the husband’s cooperation, but he still may not be found. As for the property, if the wife can’t get her husband’s cooperation, they will both be foreclosed on and may face any deficiency liability as a reminder of their lost love.
Q: My mother passed away recently and owned a condo with a reverse mortgage that was underwater. I don’t want anything to do with the property. The HOA and lender keep bothering me about payments and the property. What can I do? – J.
A: In Florida, when someone dies owning homesteaded property, it’s automatically transferred to the decedent’s surviving spouse for his or her lifetime. If there is no surviving spouse, it goes to the children, and if there are no living children, the property goes to the heirs. This means that you already own the property, and this is why everyone is calling you. Unfortunately, it has been my experience that lenders and homeowner’s associations will not quickly try to work it out with you because it is easier for them if you are on the hook. One action that you can take is called a “disclaimer.” By filling out a certain form and filing it with the clerk of court in your county, it will be as if you predeceased your mother as far as ownership of the property is concerned and the property will be owned by the other heirs in line. If no one wants to deal with the property, everyone just needs to file a disclaimer and then the lender and HOA will have to file a probate estate to get to the property. Just be careful if your mother’s estate has any other assets because they might be jeopardized by this action. Obviously, this is a complex issue and I recommend contacting an attorney.