Real Estate Fraud?

Question

I bought some investment property 2 years ago for $15,000 , rec'd a quit-claim deed, now 2 yrs later I am applying for a loan to fix up the property; have been notified by the title company there is a $21,000 lien agains the property; the perrson I bought property from had taken a loan out 6 months prior to me purchasing; now I cannot get my construction loan until the $21,000 is paid to the lien holder; I know I screwed up 2 yrs ago by not checking the title; lender is not pursuing the borrower of the loan for default in payment and will not give me any information to locate the person I bought property from, lender advised me he has over $500,000 worth of real estate transactions with this person and is not going to do anything to him. What recourse do I have if any? I believe this is some type of fraud; and only way I can proceed with my loan is to pay the lender the $21,000 for him to release the lien. doesn't seem fair. please help, Thank you Tammy W

Answer 1

Let me make sure I have the facts straight:
1) 2 years ago, you paid someone $15,000 for some investment property. You paid this amount of money without having a title search done, and getting a warranty deed?
2) You are now complaining because in order to get a loan for the property, you are being held accountable for the lien on the property.
3) If the the person you purchased it from was a realtor, and/or you used the services of a realtor to represent yourself, you *MAY* have a suit for professional negligence/incompetence. It would be, in my opinion, professional malpractice for any real estate professional, (including an attorney if one was involved) to allow the sale to go through without a warranty deed and a title search.

As you probably know by now, a quit claim deed makes no warranty of title. It just says that the person granting to you the property does so. A warranty deed, on the other hand, warrants or guarantees to you that there is a clean title.

You need to consult with a real estate attorney in your state to determine what might be done. The attorney will assist you in finding the individual to help recover your money, because it is probable that there is fraud involved.

Unfortunately, the chances of you recovering any monies from this individual may be pretty slim, based on the fact pattern you gave us.

This should be a reminder to everyone reading this: DO NOT buy any piece of real property without a title search and a warranty deed. Never sign anything you don't understand without asking a lawyer about it.

If you need a lawyer and don't have one, contact your local or state bar association and ask for a referral to a real estate attorney in your area.

Answer 2

If you do not check a company before entering into a transaction, you could lose your money, time and credibility. Some widely used resources are the Better Business Bureau (www.bbb.org) and the national fraud center ( www.fraud.org) These days, you can easily find out more about a company using the internet in a few minutes. From a company's website, you can details about its ownership, how old the company really is and feedback from the company's customers.
You can find more detailed information about a company at http://tinyurl.com/gtb89