Brian, three brothers inherited property. One brother wants to sell his share to one brother. Does the third brother have to give permission?

The short answer is no, no permission is necessary. This question illustrates a couple of different principles.

The first principle is the nature of property passing by way of will or intestacy (no will).  Whether heirs take title via a will (if by will they are rightly called devisees) or by intestacy (rightly called heirs) they take and hold title as tenants in common without right of survivorship.

The second principle is the nature of a tenancy in common.  Tenants in common hold an undivided fractional interest in the whole (that is, the property is not actually split into smaller chunks, which is possible – consider 60 acres split into three 20 acre pieces).

 So, in our example each brother took an undivided one-third interest.  That one-third interest may be bought and sold just like any other interest, and one does not need the permission of any other owners to do so.  Thus the brother can sell his interest to another brother without the permission of the excluded brother.  In fact, these interests may be sold to anyone – and that is one reason why there is a cottage industry in fractional share TIC’s (i.e. Tenancies In Common) for 1031 exchange purposes.

Rescue Scams

The economic climate has given rise to a cottage industry known as “loan auditors” or “foreclosure rescue firms.”  All essentially promise to stop a foreclosure.  I want you to be aware of new Virginia law regulating these practices.

 Typically, the foreclosure scammer will tell the homeowner that he can negotiate a deal with the lender to save the house, or evaluate the situation to look for loopholes, but the scam artist requires an upfront fee, and then often requires a more substantial fee when things “look promising.”

Another variation of the scam involves “loan rescue money.”  In exchange for short-term money ostensibly for the purpose of bringing the mortgage current and avoiding foreclosure, the scammers will have the homeowner sign documents transferring title, legal or beneficial, and if legal title transfers then they promise the homeowner a right to buy the house back while they ‘rent” it.  But whether the scammer is trying to flip the house or just “renting” it, the scammer rarely makes the house payment (simply pocketing the money) and so the house is lost to foreclosure anyway.

Under the new Virginia legislation, it is now unlawful to charge a fee to someone to avoid or prevent foreclosure prior to closing on a sale of the house (i.e. no upfront fees). Now, there is an affirmative obligation on the person providing the “rescue” money to make the underlying house payments and to apply any rents received to the house payments.  In addition, if the rescue provider makes a representation that the homeowner has an option to repurchase the property then that option must be in writing.

Please be aware of these scams, not only to protect your clients, friends and family, but also not to inadvertently get drawn into assisting someone who engages in any unlawful practices (there are legal ways to do this though).

Brian, I’ve got a closing where we can’t get the repairs done in time. What do I do?

Hmmm.  I suppose it is too late to fuss about repair timing. Perhaps that wasn’t the agent’s fault  anyway (didn’t ask).

The first thing you do not do, and I get asked this quite often, is blithely have the seller write a personal check to the buyer at closing for the cost of the repairs.  And the reason is not because it is inherently illegal to do so – rather it is illegal only if it is not disclosed to, and approved by, the lender.  So, here are your options (assuming an agreement):

· Amend the contract to extend the date for closing and get the repairs done before closing.  This is really the best option, but I understand that it is not always practical

· Check with the lender to see whether the loan type and underwriting guidelines will permit a repair credit (or escrow), and if so amend the contract and show the credit (or escrow) on the HUD-1

· If a credit/escrow is not permissible, amend to remove the repairs and instead pay closing costs, etc.  But you must check with the lender to see whether the loan type and underwriting guidelines will permit this, and as always it too must be transparent and disclosed

Brian, I’ve got a closing with an unreleased deed of trust, but the settlement agent who closed the deal is out of business and gone. What do I do?

Unfortunately we are seeing more and more of this as a result of the economy generally and the real estate market specifically.

If the problem is an unreleased deed of trust then have the sellers search their records carefully to see if they can locate anything from the closing – a payoff statement, HUD-1, etc.  We can usually track down the lender, verify payment, and get the release directly.

If the problem is something else – proof of death in the chain of title, an affidavit, or something to that effect – then we can usually solve those problems as well, it just takes us some time to do so.

But this question really suggests two indirect observations.  First, if the seller had owner’s title insurance then the seller would have a better chance of closing on time and would be protected if not.  Second, this is why that buyer should close with Lytle Title.  I have been doing this work for two decades and I have every file I have ever closed, and I am not going anywhere.

Please feel to contact me if you have questions.