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I am an investor in a property (single family house) in Georgia. I am not on the deed but titled via an equity share agreement that has been filed with the county clerk. The owner is filing bankruptcy to prevent foreclosure but also intends to list me as a creditor. Is this a way to strip my claim to title? What are the steps I should be taking to protect my interest? I am planning on hiring a lawyer. Should I be looking for a real estate attorney or bankruptcy attorney? Is this going to be a costly process?

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No, you broke it by making stuff up.  The whole issue is that the property owner seems to want to discharge OP's equity ... (more)

Glitch99 (Sep. 09, 2016 @ 10:31p) |

I'm not making stuff up.  To you it sounds like the property owner is trying to screw OP out of OP's interest.  To me it... (more)

DTASFAB (Sep. 10, 2016 @ 7:56a) |

What does any of that have to do with an equity agreement being dischargable in bankruptcy?  If there's no equity there'... (more)

Glitch99 (Sep. 10, 2016 @ 8:24a) |

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Not an expert, but wouldn't a simple quitclaim deed work here?

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

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http://www.canb.uscourts.gov/judge/jaroslovsky/decision/memorand...

The short answer is likely no, your stake in the property cannot be discharged.  Of course, there are plenty of factors and details unique to your situation that will affect the actual outcome.

Regardless, yes it will probably be a costly process, namely since the occupant has made it clear he intends to screw you.  

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So, the house is jointly owned by you and the person filing for bankruptcy, but your name isn't on the deed, is that correct?

Presumably, the house has a mortgage (hence the foreclosure concern) - the person filing for bankruptcy is presumably the debtor, your name isn't on the mortgage, right?

Does the mortgage lender know that they borrower doesn't own 100% of the house they lent against?

You definitely need an attorney, and you might well need someone with expertise in real estate and in bankruptcy (or two people).

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Glitch99 said:   http://www.canb.uscourts.gov/judge/jaroslovsky/decision/memorand... 

The short answer is likely no, your stake in the property cannot be discharged.  Of course, there are plenty of factors and details unique to your situation that will affect the actual outcome.

Regardless, yes it will probably be a costly process, namely since the occupant has made it clear he intends to screw you.  

 ​I found the same decision when I googled. It appears it was not discharged because a joint venture was created when they decided to buy the property together at the initial sale.I was not involved in the original sale. I paid off the secondary loan in exchange for a stake in the property. 

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cestmoi123 said:   So, the house is jointly owned by you and the person filing for bankruptcy, but your name isn't on the deed, is that correct?

Presumably, the house has a mortgage (hence the foreclosure concern) - the person filing for bankruptcy is presumably the debtor, your name isn't on the mortgage, right?

Does the mortgage lender know that they borrower doesn't own 100% of the house they lent against?

You definitely need an attorney, and you might well need someone with expertise in real estate and in bankruptcy (or two people).

  ​I am not on the deed or mortgage. I'm not sure the lender knows.I only know closing attorneys. Any reason I shouldn't start my search for lawyers by asking for referrals from them?

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EliteMiles said:   
cestmoi123 said:   So, the house is jointly owned by you and the person filing for bankruptcy, but your name isn't on the deed, is that correct?

Presumably, the house has a mortgage (hence the foreclosure concern) - the person filing for bankruptcy is presumably the debtor, your name isn't on the mortgage, right?

Does the mortgage lender know that they borrower doesn't own 100% of the house they lent against?

You definitely need an attorney, and you might well need someone with expertise in real estate and in bankruptcy (or two people).

  ​I am not on the deed or mortgage. I'm not sure the lender knows.I only know closing attorneys. Any reason I shouldn't start my search for lawyers by asking for referrals from them?
 

  why are you trying to complicate matters?
You are already in a deep shit....and yes you are not telling us the full story....so the best thing I can say is...hire a bankruptcy attorney.....he can tell you exactly what your rights are...

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dealgain said:   
 
  why are you trying to complicate matters?
You are already in a deep shit....and yes you are not telling us the full story....so the best thing I can say is...hire a bankruptcy attorney.....he can tell you exactly what your rights are...

  
I'm not sure why you think I'm not telling you the full story. As I've stated, I'm looking to hire an attorney. I'm here for insight into the best way to handle that.

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Is there any equity in the property (i.e. is it worth more than the mortgage)? If not, then your equity stake has no value anyway.

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cestmoi123 said:   Is there any equity in the property (i.e. is it worth more than the mortgage)? If not, then your equity stake has no value anyway.
  
Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.

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EliteMiles said:   
cestmoi123 said:   Is there any equity in the property (i.e. is it worth more than the mortgage)? If not, then your equity stake has no value anyway.
  
Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.

  
So, why isn't the house being sold instead of a complex legal fight to protect it against foreclosure?

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IANAL but you have to weigh your stake of the equity vs lawyer et al fees. I'd say if your equity is less than 10k consider making the best deal you can with the mortgage lender even if it's just to quit claim. Also if you're like me I'd add 2-3k aggravation factor into it. Also depending on the stubbornness & or ineptitude of the lawyers [both sides] your legal fees could multiply. Also possible taxes if your ownership/equity hasn't been reported correctly.

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EliteMiles said:   
Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.

  

Let's see if I got this right:
Two mortgages with liens on the property.
You paid off the secondary lien and gained some of the borrower's rights to the property.
Primary lien is a mortgage that received 9 years of payments, then generated notice of foreclosure after payments ceased.
Main owner filed BK to stall the foreclosure.

What's going to happen:
BK is not going to eliminate lender's secured interest in property.
Lender is going to be allowed to foreclose.
Lender is going to auction property.
If property sells for more than is owed to lender including costs of foreclosure, excess will go to other registered lienholders. If you didn't register a lien when you paid off 2nd mortgage, that's not you.
If there are no other secured parties, excess will go to borrower.
Far more likely situation, auction will not be more than the lender's interest in property, and all other rights (that's you) will be extinguished.

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@taxmantoo I like your answer better than mine. 
 

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EliteMiles said:   The owner is filing bankruptcy to prevent foreclosure but also intends to list me as a creditor.I assume that you paid someone else(not the owner) to own the paper for that 2nd ?

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taxmantoo said:   EliteMiles said:   Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.If you didn't register a lien when you paid off 2nd mortgage, that's not you.Does anything prevent him from now going to register that lien ?

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xoneinax said:   
taxmantoo said:   
EliteMiles said:   Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.
If you didn't register a lien when you paid off 2nd mortgage, that's not you.

Does anything prevent him from now going to register that lien ?

  What lien?  He paid off the note in exchange for the equity share, which he says is already registered.

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EliteMiles said:   
Glitch99 said:   http://www.canb.uscourts.gov/judge/jaroslovsky/decision/memorand... 

The short answer is likely no, your stake in the property cannot be discharged.  Of course, there are plenty of factors and details unique to your situation that will affect the actual outcome.

Regardless, yes it will probably be a costly process, namely since the occupant has made it clear he intends to screw you.  

 ​I found the same decision when I googled. It appears it was not discharged because a joint venture was created when they decided to buy the property together at the initial sale.I was not involved in the original sale. I paid off the secondary loan in exchange for a stake in the property. 

  You bought a stake in the property.  That is as much a joint venture as anything.

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xoneinax said:   taxmantoo said:   EliteMiles said:   Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.If you didn't register a lien when you paid off 2nd mortgage, that's not you.Does anything prevent him from now going to register that lien ?

Registering a 2nd or 3rd lien now is useless because the 1st lien holder will foreclose on the property and will get the judgement (Les pendens) in court and will auction off the property at bare minimum to cover their interest (remaining principal bal on the loan) and any unpaid government liens. They could care less about 2nd or 3rd lien holders or any mechanics liens or the owner's equity.

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mwa423 said:   
EliteMiles said:   
cestmoi123 said:   Is there any equity in the property (i.e. is it worth more than the mortgage)? If not, then your equity stake has no value anyway.
  
Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.

  
So, why isn't the house being sold instead of a complex legal fight to protect it against foreclosure?

  
​The goal is, of course, to sell the house. House has been on the market for a while. Houses at this price point in this area take some time to sell.

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taxmantoo said:   
EliteMiles said:   
Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.

  

Let's see if I got this right:
Two mortgages with liens on the property.
You paid off the secondary lien and gained some of the borrower's rights to the property.
Primary lien is a mortgage that received 9 years of payments, then generated notice of foreclosure after payments ceased.
Main owner filed BK to stall the foreclosure.

What's going to happen:
BK is not going to eliminate lender's secured interest in property.
Lender is going to be allowed to foreclose.
Lender is going to auction property.
If property sells for more than is owed to lender including costs of foreclosure, excess will go to other registered lienholders. If you didn't register a lien when you paid off 2nd mortgage, that's not you.
If there are no other secured parties, excess will go to borrower.
Far more likely situation, auction will not be more than the lender's interest in property, and all other rights (that's you) will be extinguished.

  
​Yes, you have the scenario correct except I have filed the equity share agreement. My main concern is whether the bankruptcy would wipe out this agreement.

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Glitch99 said:   http://www.canb.uscourts.gov/judge/jaroslovsky/decision/memorand... 

The short answer is likely no, your stake in the property cannot be discharged.  Of course, there are plenty of factors and details unique to your situation that will affect the actual outcome.

Regardless, yes it will probably be a costly process, namely since the occupant has made it clear he intends to screw you.  

  
That court was applying California law.  It holds exactly 0 precedent in Georgia.  Get a GA bankruptcy attorney.

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EliteMiles said:    
​Yes, you have the scenario correct except I have filed the equity share agreement. My main concern is whether the bankruptcy would wipe out this agreement.
 


It sounds like he added you to his creditor matrix, so if he doesn't owe you money, he's treating your 'equity share' as a debt to be extinguished.

I've never heard of somebody launching an adversary proceeding to declare himself a partner instead of a debtor, but it kind of looks like that's where you are right now, if you expect to get anything out of your investment.
Or, alternately, you might assume that if he doesn't owe you any money there's no debt for the BK court to discharge, and the court doesn't have the power to take away your joint ownership.
Do BK attorneys give free consultations to people who aren't considering BK filing?
  
If the court allows the current owners to sell the property, and they get more than the mortgage, what, if anything, do you have to do to prevent the other owner from keeping your share of the proceeds?

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I'm thinking the BK is a red herring here. The real issue is you have an unrecorded ownership interest in the property and aren't listed on the deed.

Or do you just have a contract that says he'll pay you x% of the appreciation after y years without you ever having an ownership interest?

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taxmantoo said:   
EliteMiles said:    
​Yes, you have the scenario correct except I have filed the equity share agreement. My main concern is whether the bankruptcy would wipe out this agreement.


It sounds like he added you to his creditor matrix, so if he doesn't owe you money, he's treating your 'equity share' as a debt to be extinguished.

I've never heard of somebody launching an adversary proceeding to declare himself a partner instead of a debtor, but it kind of looks like that's where you are right now, if you expect to get anything out of your investment.
Or, alternately, you might assume that if he doesn't owe you any money there's no debt for the BK court to discharge, and the court doesn't have the power to take away your joint ownership.
Do BK attorneys give free consultations to people who aren't considering BK filing?
  
If the court allows the current owners to sell the property, and they get more than the mortgage, what, if anything, do you have to do to prevent the other owner from keeping your share of the proceeds?

  
I've added these points to my notes that I will give to my attorney. Thank you all for the ideas. The agreement states "The parties shall hold title to the property as tenants in common (partnership is not intended)" so this may not work.

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Tenants in Common doesn't sound like a debt to me.
I'd be tempted to just ignore the BK, and whip out my "we're co-owners" agreement if there's any money to be had.

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taxmantoo said:   Tenants in Common doesn't sound like a debt to me.
I'd be tempted to just ignore the BK, and whip out my "we're co-owners" agreement if there's any money to be had.

  
Yeah.  I'm thinking the only remedy OP has is against the property owner.  He has no recorded interest.

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FreddyPharkas said:   
taxmantoo said:   Tenants in Common doesn't sound like a debt to me.
I'd be tempted to just ignore the BK, and whip out my "we're co-owners" agreement if there's any money to be had.

 Yeah.  I'm thinking the only remedy OP has is against the property owner.  He has no recorded interest.

  OP did say this:

"titled via an equity share agreement that has been filed with the county clerk"

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OP's recorded interest is clearly inferior to the 9 year old mortgage lien, so OP has no interest unless the property (or sale proceeds) still remains after the mortgage is gone.

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EliteMiles said:   I am an investor in a property (single family house) in Georgia. I am not on the deed but titled via an equity share agreement that has been filed with the county clerk. The owner is filing bankruptcy to prevent foreclosure but also intends to list me as a creditor. Is this a way to strip my claim to title? What are the steps I should be taking to protect my interest? I am planning on hiring a lawyer. Should I be looking for a real estate attorney or bankruptcy attorney? Is this going to be a costly process?
  Besides everything else that's been mentioned, to answer this question, you could pay the mortgage.

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taxmantoo said:   OP's recorded interest is clearly inferior to the 9 year old mortgage lien, so OP has no interest unless the property (or sale proceeds) still remains after the mortgage is gone.
  OP might have to be the buyer at auction to get anything out of this deal.

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ach1199 said:   xoneinax said:   taxmantoo said:   EliteMiles said:   Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.
If you didn't register a lien when you paid off 2nd mortgage, that's not you.
Does anything prevent him from now going to register that lien ?
Registering a 2nd or 3rd lien now is useless because the 1st lien holder will foreclose on the property and will get the judgement (Les pendens) in court and will auction off the property at bare minimum to cover their interest (remaining principal bal on the loan) and any unpaid government liens.
At an auction, the price might end up higher than the bare minimum you describe.

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xoneinax said:   ach1199 said:   xoneinax said:   taxmantoo said:   EliteMiles said:   Mortgage has been paid for 9 years, so with the down payment and principal paid, there is equity.
If you didn't register a lien when you paid off 2nd mortgage, that's not you.
Does anything prevent him from now going to register that lien ?
Registering a 2nd or 3rd lien now is useless because the 1st lien holder will foreclose on the property and will get the judgement (Les pendens) in court and will auction off the property at bare minimum to cover their interest (remaining principal bal on the loan) and any unpaid government liens.
At an auction, the price might end up higher than the bare minimum you describe.


That is not the case most of the time.

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Not sure if it would help but go to www.investability.com or www.altisource.com

there might be some info.

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I'm assuming the other owner wouldn't have let it fall into foreclosure if there was equity to be saved.

What does the agreement say about defaults and failure to pay for upkeep? Can you make good on the foreclosure and take over the property? Would you even want to?

I'd appreciate it if you filled us in on all the details, as a caution to anyone here who might be tempted to do a deal like this. Redact any personal info.

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ach1199 said:   
xoneinax said:   
At an auction, the price might end up higher than the bare minimum you describe.


That is not the case most of the time.
  
In my area, the vast majority of the time the bank bids what the borrower owes it, and nobody else bids after that.
Then the bank assumes ownership, and lists it for sale at some marketable price, which might be lower or higher than the auction. But they aren't going to want to sell it to the deadbeat they just foreclosed on, or his family, at any price.

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Sounds like a love deal gone bad?

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TravelerMSY said:   I'm assuming the other owner wouldn't have let it fall into foreclosure if there was equity to be saved.
I'm guessing the owner can't afford the mortgage payments, and is now filing bankruptcy to stay the foreclosure process, with the intent of keeping the home under the homestead exemption while reaffirming the mortgage, and after all his other obligations are discharged use his ongoing income to catch up on the mortgage. And he figures that while he's at it, he might as well get rid of this investor. I don't think it'll work out that way for him.

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taxmantoo said:   In my area, the vast majority of the time the bank bids what the borrower owes it, and nobody else bids after that.
Then the bank assumes ownership, and lists it for sale at some marketable price, which might be lower or higher than the auction. But they aren't going to want to sell it to the deadbeat they just foreclosed on, or his family, at any price.  
 


I would not think this comes up a lot, if they had the money at auction it would never have gone into default.  Honestly why would they CARE, if they are being made whole.  

I *could* see them making the sucker bleed a little bit in the rare case it happens by bidding it up a bit.  Not TOO far because the owner does end up getting the overage.  (or the second/third debtor in line, but either way the bank loses even more money unless the house has a lot of equity)

Skipping 21 Messages...
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DTASFAB said:   
Glitch99 said:   
DTASFAB said:   
Glitch99 said:   
it sounds more like OP didn't understand what he was agreeing to when accepting the Equity Agreement in exchange for the money to pay off debt.

  fixed for you

  No, you broke it by making stuff up.  The whole issue is that the property owner seems to want to discharge OP's equity stake in bankruptcy as if he was a creditor.  He isn't a creditor, he's a partner in a joint venture.  OP never even implied that he thinks he should get more than the actual equity in the home.

I'm not making stuff up.  To you it sounds like the property owner is trying to screw OP out of OP's interest.  To me it sounds like the property owner already screwed OP because OP didn't understand what paperwork was necessary to have his interest in the property properly recorded at the time of the original agreement.

The screwing had already happened when OP gave the property owner the money, not after the property owner declared bankruptcy.

  What does any of that have to do with an equity agreement being dischargable in bankruptcy?  If there's no equity there's no equity, that isnt in dispute.  The property owner wants to try to keep the home while killing the equity agreement, so that he doesnt have to share any future equity gain with OP; OP just expects his equity agreement to stand until the property is actually sold.  If the property is sold with no equity, OP knows he gets nothing - but that isnt the issue in any way, shape, or form.

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