Foreclosure in Goshen>Question Details

Mrs X, Other/Just Looking in New York, NY

We leased to purchase a home that we found out the LL had not paid the mortgage on in 3 years. He knew it when he leased it to us, is this legal?

Asked by Mrs X, New York, NY Sat Aug 21, 2010

We gave him $10,000.00, put $15,000.00 in work. He came over and saw the work that we were doing & never said a word except "boy if you keep it up i am not goig to make anything on this house." We did have an agreement that any work & supplies would come off of the cost when we purchased. We also paid him rent everymonth which a portion of it was supposed go towards the dp of the house. This is a 2 family house, the reason we got it was to take my 90 yr old mother out of the nursing home our son and daughter-in law in one unit, we live in the other to share in her care. to make a long story short my mother sadly passed away, we now have found out and have proof that he has not paid the mortgage on the house in almost 3 yrs. Is this legal? Our lease is up and he would not renew it.

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the problem here is that the monies you paid him never went to the bank..the bank is the true owner and IF htey allowed the lease, would have wanted the proceeds in order to satisfy the debt on the property..If you have a written agreement with the seller that he owes you them money with the house as collateral, go to the town clerk and place a lean against the sale of the house for any monies owed...not legal advice, but it is what i would do..
0 votes Thank Flag Link Mon Aug 30, 2010
Get a lawyer.

I'm not a lawyer, so this isn't legal advice. And, really, truly, you need a lawyer. However:

Was it legal for him to lease you a home even though he wasn't making mortgage payments. Possibly. He certainly had the right to lease it to you. The question probably was: Was there fraud involved? And I suspect a lawyer would tell you that while there probably was, it'd be very, very difficult to prove.

Who drew up your documents? And who reviewed them? Again, I'm not a lawyer, but your problem could have been avoided in any number of ways. For example, you should have had him sign an "Authorization to Disclose," which would have allowed you to contact his lender to make sure he was paying his mortgage.

Or you could have had a third party--a lawyer, for instance--serve as an intermediary. You'd have made your monthly payments to the lawyer, and he would have forwarded on the proper amount to the lender.

Or you could have set it up as a land trust. The property could have been put into a trust. You'd have paid the trustee every month, and the trustee would have forwarded the appropriate sums to the lender and to the landlord.

Or you could have purchased subject to the existing mortgage. He would have deeded the property to you and you'd have made the mortgage payments.

Right now, you're in bad shape. The option (the agreement to lease the home) is worthless if the owner isn't able to convey it to you.

As far as renewing the lease, what does your lease and your option provide? It should have specified under what conditions your lease could be renewed. And that should have been written to mesh with the option portion. Basically, it should have said that so long as you were current on your payments, you'd have the right to renew for x number of years. And the point is that "x number of years" would be long enough for you to have purchased the home. Again, who wrote these documents? And who reviewed them?

But, really, your right to purchase gets flushed down the toilet if the property is foreclosed upon. Or--most likely--if he isn't able to sell the property to you. (Again, depends on what the option or purchase agreement provides, specifically regarding payment of damages for inability to provide clear title.)

So, see a lawyer. But definitely do NOT see the lawyer (if there was one) who either drafted or reviewed your documents initially. He/she clearly had no idea what he/she was doing.

Hope that helps.
0 votes Thank Flag Link Sat Aug 21, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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