selling a house you don't own??

[earlyre]

Let me start this by saying i don't have a horse in this game, just something that boggled me.

also, I am not a Real Estate Attorney, nor did i stay at a Holiday Inn Express ant any point...

so my buddies Mom moved to Alaska a few years back, kept her house here locally.
Eventually, once the Youngest kid moved away, and it would be sitting empty, she put it on the market(April '17?) about six months later she agreed to sell it land Contract( after several offers that fell through for one reason or another)

My Understanding of land Contract is: they make payments to her, and she is still the owner of record until they've paid it off.( she is still the listed owner on the county auditors page)

I drive past the other day, and notice a for sale sign in the yard.... look it up on local real estate pages... holy crow, they've done a ton of work to it(looks good, but they aren't necessarily the mods I would have done myself, but...). send her a msg asking about it...
turns out they are 3 mos behind on payments.

so the question...How can they sell the house, if they don't own it? (because again, know nothing about Real Estate Law)
is there some kind of clause in a "standard" land contract arrangement to allow something like this??

 

[GrtArtiste]

When you say..."a for sale sign"...do you mean that a realtor listed the property? Anything else (for sale by owner?) could mean a variety of things, not the least of which is some sort of fraud attempt.

 

[earlyre]

Realtor. Same company she used to sell it.( Agent she listed with is with a different company now)

 

[Johnny2Bad]

How it would work where I live:

There is nothing special about this transaction. Like any sale with a mortgage, funds are held in Escrow until all encumbrances are satisfied. So the mother gets paid under the terms of the original agreement, things like property taxes to the due date are satisfied, fees to the lawyers and anyone else are paid out, then the sellers gets what is left.

Even when a sale is made whereby the mother is not paid in full, there would have to be an agreement for the seller to continue to owe on the transaction with a new loan agreement (that the mother would obviously have to agree to, because she continues to own title so she is first paid) before title could transfer to the new owners.

Because the funds are held in Escrow, no actual dollars can move anywhere until every T is crossed and every I is dotted, so if the deal falls through, the buyers get their money back. At worst, they lose access to their cash for maybe two weeks (because "nobody" includes them).

Same as if the bank foreclosed and didn't get the original mortgage amount from a sale; the persons who defaulted on the mortgage would continue to be responsible for the original amount less the sale price after the title has changed hands.

I suspect it's much the same in Ohio.

What might be different in Ohio as this is not universal, here the Real Estate Agent is required by law to search out all encumbrances on a properly and generally will refuse to list it unless the expected sale price exceeds all encumbrances. Without such a requirement those details are left to the selling and buying parties' Lawyers.

That is nearly trivially simple here because we use a Torrens System for property titles but in other jurisdictions in Canada that use a Title system similar to what is used in the US (eg Eastern Canadian provinces) it still gets done, it just costs a lot, lot more in fees to do.

When I bought my house the total Legal Title Fees (including the transfer to me, and the liens and encumbrance search) cost me $C 250.00 ($US 190.00). Total fees including paying the Lawyer and the Mortgage Lender and Mortgage Insurer was $C 1800.00 ($US 1368.00). I know how much it costs to to the same in Ontario and in MN, it's a huge difference not to mention the stack of up-to-300 year old papers that comprise the entire title (aka "deed").

https://en.wikipedia.org/wiki/Torrens_title

 

[silveravant]

The first thing I would do is check the county auditor website and see who is listed as the owner.

 

[Donald]

Unless someone is forging papers, when the new buyer has a title search done, they will realize the person who is selling it does not own it.

I would ask the real estate agent what the deal is.

Does the mom have all her wits? Could someone have gotten her to sign papers and she forgot?

 

[earlyre]

Yes, she is still the owner according to the county.
Yes, she still has the vast majority of her wits. ( She's the doctor in her small Alaskan village)

 

[LoneRanger]

Originally Posted by earlyre
Yes, she is still the owner according to the county.
Yes, she still has the vast majority of her wits. ( She's the doctor in her small Alaskan village)


Something sounds afoot then. I'd be contacting the listing realtor and finding out straight away wth is going on.

 

[silveravant]

As a realtor in Ohio my only advise is to consult a lawyer. If the "rent" (not sure about the "land contract" contract) is late eviction may be a possibility. Again, a realtor is not a lawyer and can not offer advise above their knowledge.

 

[Mr Nice]

Originally Posted by silveravant
As a realtor in Ohio my only advise is to consult a lawyer. If the "rent" (not sure about the "land contract" contract) is late eviction may be a possibility. Again, a realtor is not a lawyer and can not offer advise above their knowledge.

Yep. + 100000%

 

[Bud]

Real Estate Lawyer after contacting your Mother to see what she is or isn't aware of. If your Mother is still the legal owner I certainly don't see how the house can be sold with her name on the deed and without her approval.

 

[WhyMe]

i am not a real estate attorney but have done a few buys in my life. Sound like she got into one of the rent to own schemes or she is financing it herself. i would say its kinda like financing a car. you don't own it till you have paid it off, but you have the right to sell it and pay it off . this would be great for a housing market that is really hot as you can unload it and make money.

if they are behind in payment its time to look at the paperwork and start evictions. You really need an attorney to look at it .

 

[ArrestMeRedZ]

Land contracts used to be common in some areas when the property was owner financed, and the owner wanted to be able to recover the property easily and quickly in case of a default. The ones I'm familiar with, the owner could reposes the property before it was 3 months in default.

In this case, while not having seen the contract, I suspect the purchaser has the right to sell, provided the original owner is made whole - all payments are made current, penalties and late fees paid, and the property is paid off.

A lot of municipalities have figured out how to tax the heck out of real estate transactions. A land contract avoids this, as recording a title change will only happen once, and only if the contract is fulfilled. In this case the subsequent (second or next) buyer will effectively "buy" from the original owner, the interim owner who did the fix up may make money on the transaction if it sells for more than his contracted amount plus late fees and missed payments.

Depending on the contract, and local laws, with payments three months late, the original owner may be able to declare the purchaser in default, take possession of the property, and sell it again herself for a higher amount now that it has been fixed up.