Legal Question in Real Estate Law in California
Owner harassing!
My brother and i (and sister in law) bought a house with 2 apartments. renting them out. we have been on the note for 5 years. my brother got behind on property taxes one year. the person whom is holding the note. went and paid up the taxes. without telling us. we made arrangements to paint his house and take out some bushes. for back taxes. and he forgave one month payment. payments start in june 1st,2001. we have till oct. 1st 2001 to paint his house. he's cussing us out. and changing his story every other week.
we only owe 10 years on loan. should we give the house and apartments back? or can we make him stop harrassing us. and treat us with a little dignity.
i would appreciate a response.
thank you,
--name removed-
1 Answer from Attorneys
Re: Owner harassing!
Why would you want to give up the properties? After five years of payments and a strong market for residential property throughout California, you must have a lot of equity in the properties.
A secured lender has a right to pay unpaid property taxes, but ordinarily would not do so without first calling the delinquency to the attention of the borrower. This suggests an overall bad relationship with the lender.
You should be sure there is a current Request for Notice of Default recorded in the county where the property is located, indicating that you (at your current address) are to receive notice of a default beginning foreclosure proceedings. This will help protect you if your brother doesn't make payments and foreclosure is begun.
Exchanging painting services for forgiveness of debts may work, but there are some problem areas for you to consider. First, you may be violating the contractor license laws. Second, if you are on bad terms with this person and your agreement isn't in writing, how can you be sure you'll get what you expect out of the deal? Also, the owner may complain about every little drip and drizzle.
I have a couple other suggestions in addition to recording a request for notice of default.
(1) Get all the deals in writing.
(2) Have a real estate professional and/or a property management service look at the properties and the leases and see what the property is worth in today's market and whether the lease rates are appropriate and whether under better management the properties could produce a lot more income.
(3) After you get some value and management info, see a couple of loan brokers about opportunities to re-finance and get rid of this current lender.
(4) Consider selling rather than just allowing the lender to take the properties back.
(5) make sure that all the defaults (unpaid taxes and loan payments, for example) are taken care of and that they stay that way.
(6) Get a lawyer to assist you with all of the foregoing unless you feel very confident you can and want to do it all yourself.
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