OfflineI've been asked this question a couple of times over the last month through PM and on other websites so I thought I would post something for new investors to think about so you aren't surprised.
When you buy and sell property in your own name,there is something you should be aware of. If you have a judgment against you, it causes a "cloud on the title" as soon as you buy it. In other words, that judgment will have to be paid before the deed can be transferred as a "clear and free" title to your buyer. No warranty deed can be given.
Generally speaking, this only occurs against property that is bought and sold in your home county as that is where your credit filed their judgment. However, sometimes common practice is to file in adjoining counties as well, so please check the county records before you buy so you won't be surprised. And be advised that some states allow for a state wide judgment to be applied, so check with your legal advisor regarding your situation.
The best way around this (besides not having any judgments) is to buy and sell property through another entity that has no bad history. I would suggest an LLC for most situations, but please check with your accounting and legal advisors to see what they suggest for you for your situation and your state regulations.
Lastly, this doesn't usually apply to assignments but it would apply to double closings (with or without transactional funding). It doesn't really affect L/O sandwich transactions UNTIL you go to sell it to your L/O tenant (if you use a true double closing). Again, check with your advisors regarding the dos and don'ts for your state and particular situation.
Better to know ahead of time than find out at the closing table that the transaction can't go through.
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I'm sure this will save some people a lot of headaches.
Thanks Bill!
Karen
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Despite not applying to us, this is very useful to any investor with a credit problem.
As usual Bill, your vast knowledge & wisdom is a true asset to this website!
Great info to avoid a BIG headache! I'm so glad everyone here shares so much information that would otherwise have to be learned through trial and error. Thank You!
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Thanks Bill for the info. This is very crucial to know. You always bring the good stuff to this site.
Randy Sherman
Elkton Maryland
I am in that exact situation right now.I am in the process of buying a mobile home on a lot with garage. when doing my research at the courthouse I discovered a judgement against the seller.I had to go through the channels to remove the judgment before closing.AS BILL stated this is a very important part 2 research before proceeding with any deals. the process is contacting a new york state taxation and finance in my case finding out what the total judgment is the with penalties.
RESEARCH.....
jay
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You are a valuable wealth of information. Bookmarked and so noted.
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Thanks Bill you never let us down with your continued education for us. It's much appreciated.
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Bill this is something a lot of new investors do not now. Thanks for the information.
Steve
Steve and Veronica
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Bill so thanks a lot for this information,so I guess it is always best to have a title search done as well no matter what so this way you know on the seller side there are no problems and on my side there are not any problems though but one has to know this as well not that oopss happens right at closing and you get told that their is a judgement against you for some reason and you did not know at all.
shawn
to this site Bill! Thanks for sharing the great knowledge you've acquired over the years!
Thanks for that knowledge. I would have never thought of that. I'm glad you're back
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Thank you Mr. Bill for alerting us to one more possible situation we need to include in our Due Dil list.
JB thank you for the excellent example. The DG website is "one of a kind".
Steve
We seldom get what we want, but we will always get what we expect.
Great Post! Always appreciate tips like that!
Deb