Shady lawyer coverup- now property is in foreclosure

[mschucktown]

What is the name of your state (only U.S. law)? South Carolina

This is a long story but I will try and shorten it as best I can. Here goes:

My father owns (paid off) a building that he was renting out to guy he has known for years. The guy was interested in purchasing the building and after a few months my father finally agreed. The deal was-- the buyer was to pay $20K down and $1K per month for the next 6 years. My father agreed to do it this way as a favor to this guy because he thought he was a good person. On the day of closing (2 Dec 09) my father, my father's lawyer and the buyer met and the contract was prepared for signatures. The buyer did not have the $20K at the table (he said it was on the way--whatever that meant). The lawyer suggested that they go ahead and sign all the paperwork in the meantime. He assured my father that he would not file any of the paperwork until the money was in my father's hand. Well, the lawyer gave the buyer the paperwork before my father received his downpayment--without my father's knowledge. My father finally gets his $20K downpayment from this guy around 22/23 dec 09. During the time between 02 Dec 09 and the day my dad received his down payment--the buyer went to a loan shark (22 Dec 09) and borrowed the $20K for the downpayment using the deed that the lawyer gave him--and my dad's lawyer was aware of this. This info came to light when my father got a certified letter in the mail on 24 Dec 10 stating his property was going into foreclosure because the buyer lapsed on his payments to the loan shark so now they want the property. The loan shark assumes they are 1st mortgager but my dad's deed was filed 1st. Both deeds were filed by my father's lawyer on 31 Dec 09. The title to the property is still in my father's name. The contract states that no tranfers of the property could take place without the knowledge/written consent of the owner of the property. The buyer has since missed 3 payments owed to my father but he continues to use the building to make money. Who is at fault in this business deal gone wrong?? What can my father do to save his property without having to pay for it? What actions can he take against the buyer and his so called lawyer (who should have known better)? Any advice would be greatly appreciated!!!!! Thanks......

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[justalayman]

. The title to the property is still in my father's name.

then why were there any deeds written?

You have a lot of confusion going on in your post. You say people have written and recorded deeds yet you sat the property is still in your fathers name.

If there were deeds written and recorded, the property is no longer in your fathers name. So, who signed any deeds transferring title to the property?

Has your fathers or the loan shark mortgage been recorded?

 

[mschucktown]

The title to the property is still in my father's name because the buyer was on a payment plan and would not receive the title until paid in full. The lawyer suggested that they sign the paperwork even though the buyer did not have the downpayment. The lawyer gave the buyer the signed deed and he also recorded the deeds (my father's and the loan shark's) at the courthouse--on the same day. He was not supposed to give the buyer the signed deed until my father received the downpayment. Since the lawyer gave the buyer the signed deed before he was supposed to---the buyer was able to go to the loan shark and use the property to get a loan--which he used for the downpayment. I assume the loan shark took a chance and gave him the loan without the deed being processed because it was already signed so they figured the property was as good as his. Just like I'm sure the lawyer took a chance and gave him that signed deed thinking he would payoff the loan shark with no problem. Please understand the lawyer knew what the buyer had to do to get the down payment. My father was not aware. They hid this transaction from my father. He would never allow someone to use his property as collateral to get money to pay him---that makes no sense. I know the way he went about the business deal was not wise but he was trying to help the guy out. If he had known the type of snake in the grass he was dealing with he would have never sold him the property.

My father told me he still has the title. The lawyer gave us a copy of the papers showing my father's deed and mortgage with the buyer was filed. We have a copy of the contract (deed??) between the loan shark and the buyer that was filed but no copy of the mortgage being filed (if it applied to their agreement).

 

[justalayman]

The title to the property is still in my father's name

not according to this:

The lawyer gave the buyer the signed deed and he also recorded the deeds

First, your father should not have signed a deed. He did, it was delivered, and it was recorded. As is stands, your father no longer owns the property.

He was not supposed to give the buyer the signed deed until my father received the downpayment.

it sounds like that is exactly what happened. The buyer gave the lawyer the down payment so the lawyer recorded the deed. Your father did receive the down payment, right?

Please understand the lawyer knew what the buyer had to do to get the down payment. My father was not aware.

In truth, it is irrelevant.

He would never allow someone to use his property as collateral to get money to pay him---that makes no sense.

well, here may be his salvation. Until your father received the down payment (or his agent, the attorney on your fathers behalf), the buyer could not deed any current interest in the property to the loan shark because he didn't have any to transfer. Only after your father deeded the property to the buyer could the buyer deed any current interest in the property to another.

My father told me he still has the title.

there is no physical title to show. Title is simply a record of ownership as determined by the deeds.

The lawyer gave us a copy of the papers showing my father's deed and mortgage with the buyer was filed.

that deed is what removed your father from holding title to the property. If the mortgage is recorded, he should still be ok. If the buyer is not paying the payments, your father should look into a foreclosure action.

We have a copy of the contract (deed??) between the loan shark and the buyer that was filed

I don't know if it is a deed or not. There are very specific rules to the construction of a deed and if that does not meet those requirements, it isn't a valid deed.

Your father needs to find a different lawyer to review this. From what you have said, he hasn't lost everything yet.

 

[mschucktown]

OK...I think I understand you now about the title

Now, the lawyer gave the buyer the deed BEFORE my dad got his downpayment. The buyer was able to get the loan to pay my father his downpayment--by using the deed. He got the loan on 22 Dec 09. Gave the lawyer the check and the lawyer sent my dad a check in the mail. The lawyer recorded the deed(s) on 31 Dec 09. Unfortunately, since they signed the deed on 02 Dec 09--it probably states as though that's when he paid him too. Luckily, he recorded my dad's deed first. According to his new lawyer, that makes dad 1st mortgager on the property. Do you think he has a valid lawsuit against his lawyer??

 

[latigo]

How can you expect assistance in suggesting solutions to your father’s dilemma when you come at us with such contradictory statements as these:

(1) . . . the buyer was on a payment plan and would not receive the title until paid in full.

(2) . . . He (the attorney) was not supposed to give the buyer the signed deed until my father received the down payment.

If No. 2 is accurate, then what is the logic of complaining that the buyer secured a mortgage loan on the building whether it was before or after he made the down payment?

You tell us that he received that loan “on the strength of the deed”.
A deed that according to No. 2 he was entitled to receive prior to paying of the balance of the purchase price.
______________________

Next you begin by telling us that your father owned clear title to the building at least some months before this sale episode with the tenant.

If so, then please explain why your father’s unrecorded deed to the building was in the hands of his attorney and not placed of record until December 31, 2009. You must be mistaken in this regard.

Both deeds were filed by my father's lawyer on 31 Dec 09.

I think the smartest thing your father can do now is to take this matter completely out of your hands and place it with a competent lawyer with the thought of filing a post default suit to forfeit/foreclose out the buyer’s interest under the contract and quiet title against both the buyer and the loan shark.

There are other issues here of course, but let the "new" attorney deal with them.

 

[mschucktown]

@latigo

I am presenting the info as told to me by my father...who is not very knowledgeable about the sale of real estate, hence why he hired a real estate attorney who in turn screwed him. I am not a real estate guru and definitely not an attorney, hence why i came on the site seeking advice. He has hired an attorney to handle his case. Instead of being rude to me--you could have just read my post and kept it moving if it was too "contradicting" for you to try and answer. That is all****************************..

 

[Hot Topic]

Now you admit to not being knowledgeable on the subject. Better for you to have said something in the beginning rather than to respond to latigo's efforts to obtain clarification on some statements like a petulant child.

Next time, instead of trying to take advantage of a free advice forum, go to a lawyer. He or she will be glad to explain the situation to you as time passes and his or her fee increases.

 

[mschucktown]

@hot topic

If you are not offering any advice to my problem why are you even posting??!! As I told latigo if the question is too confusing--don't try to answer!!! Don't get irritated with me because I am not well versed in law. Do what the other 100 other people did and move on without comment. My father hired another lawyer the same day he talked to his old lawyer. He explained everything he needed to do. So, I came on here to see if I would get the same advice he was given. Furthermore, the answers I got from justalayman had already satisfied my curiosity so I was done with the question. THAT is all****************************

 

[latigo]

@latigo

I am presenting the info as told to me by my father...who is not very knowledgeable about the sale of real estate, hence why he hired a real estate attorney who in turn screwed him. I am not a real estate guru and definitely not an attorney, hence why i came on the site seeking advice. He has hired an attorney to handle his case. Instead of being rude to me--you could have just read my post and kept it moving if it was too "contradicting" for you to try and answer. That is all****************************..

Rudeness? How about you getting abreast of the facts before acting on supposition alone you accuse a person of professional treachery

. . . I'm SURE the lawyer took a chance and gave him that signed deed.

(And how can you say the lawyer gave him the deed when you tell as that it was the lawyer that recorded it?!)

Without being privy to the conversations that ensued between your father and his attorney and admittedly ignorant of the contents of the buy/sell agreement you’ve accused the attorney of conspiring to defraud his client out of a first lien holder position. (For what possible purpose?)

And yet you tell us that it has since been learned that no professional treachery in fact occurred because your father is secured by a 1st mortgage. Meaning that the buyer’s deed was not recorded until after the seller’s lien was placed of record.

Which also means that this “foreclosure” business which you throw up in the face of the attorney can have no consequence with respect to our father’s security interest in the building.

In one instance you tell us that the title to the building was not to pass until the full purchase price was paid. In another you say that the buyer was entitled the to receive a deed to the building upon paying the $20K down.

Also unbelievable is your representation that that your father did not hold record title to the building he had been letting for some months until four weeks after he agreed to sell it!

Obviously neither myself nor anyone else in here knows what actually occurred and its not likely that we will learn from you.
But if you wish to consider bringing attention to material discrepancies and unsupportable supposition in your narrative as a personal affront, then so be it.