If the owners recently quit claimed the property to a friend for $10? What happens now?


#1

I am interesting in purchasing my neighbor’s house so it doesn’t go to REO. It is a multi million dollar property. They recently quit claimed the deed to a friend for $10. Will this delay the foreclosure? If I buy the property at trustee sale, will the quit claim deed cloud the title?


#2

The Deed won’t cloud the title. Who is in possession? The friend or the “ex-owner”?
Of course if the friend files bk. to stall the sale - the sale would be postponed. The bank, if they wanted, could get almost immediate Bk. relief to go to sale. Of course many banks simply aren’t going to sale even when they can.


#3

The house is vacant. No one is in possession. I’m not sure why they would quit claim the property when I doubt it will stall the sale. Maybe they hired a poor attorney…


#4

The “quit claim game” should not impede a lender from foreclosing on a DOT. Moreover, as miketh points out, this will not cloud title. Regardless of who now “owns” the property (via gift or $10 sham sale) if the outstanding loan remains in default and lender has followed all of the proper protocols (NOD/NTS etc), they can proceed to foreclosure (trustee sale).

Seeing the “quit claim game” with increasing frequency, but this accomplishes nothing more for the delinquent mortgage payer than rearranging the deck chairs on the sinking ship. If the homeowner sees no way out (way underwater and failed short sale), sometimes they will simply turn over (quit claim for virtually no $0.00 consideration) the property to a third party. What I have seen happen, on more than a few occasions, is the recipient of the “gift” (getting a house for “free”), turn around and begin renting out the property and skimming rent. Not sure if the 3rd party is guilty of a crime in such instances? I suppose an aggressive, prosecution-minded lender could claim a conspiracy between the ex-homeoner (who still owes the mortgage) and the new owner/landlord (giftee) who is enjoying nice cash-flow. But not many rent-skimming cases find their way to court.

Back to your example Heidismilde … if the house is vacant, then it seems that the homeowner has truly “given up” and may have simply moved titled to someone else in the belief that this will remove their name from an impending foreclosure?

One thing to keep in mind… since you stated that you were interested in buying the property at a trustee sale, make sure that the deed of trust (DOT) going to sale is the senior lien on the property, as you would be responsible for paying off any open liens/loans etc that have been recorded before (are senior to) the DOT you might by at the trustee sale.