Legal Question in Real Estate Law in Oregon
Question on a grant deed and a trust deed with an inactive LLC
My wife sold a residential property to a LLC in Portland, Oregon in November 2001 with a carry-back loan. It was a trust deed sale. She also signed a grant deed to the LLC. She recently found out that the LLC was inactive and had been administratively dissolved at the time of the sale. According to the secretary of state, the LLC cannot be reinstated since another business already uses the same name. My wife was also told from the title company that the trust deed was not recorded due to the bounced check from the buyer. My wife still has the title of the property in her name.
Although my wife had a legal contract with the buyer, is the sale still enforceable? Are the grant deed and trust deed still valid today?
Thank you very much
2 Answers from Attorneys
Re: Question on a grant deed and a trust deed with an inactive LLC
There are several ways to approach this, depending on what the actual status of the transaction is.
Although the trust deed (which is a financing instrument) may not have been recorded, was the "grant" deed itself recorded? The "grant" deed (Oregon usually uses some form of warranty deed) is the document that transfers title from one party to another. If the warranty deed was recorded, then the title would have been transferred to the LLC.
The fact that the LLC has been administratively disolved by the state, would not automatically eliminate the rights that its members may have had to any assets of the now disolved LLC. Although someone else is now using the name, the LLC could be reinstated with a new name.
If the LLC did not exist at the time of the transaction then the transaction would be a nullity and you would need to action to clear the title to return it to your wife's name.
There are many other questions that need to be answered before a decision can be made about what action to take to resolve this problem.
Do you actually know the status of the Oregon property at this time? Is it occupied? By whom?
Was your wife supposed to get payments on her trust deed and is she still getting those payments?
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Re: Question on a grant deed and a trust deed with an inactive LLC
Somehow this question regarding Oregon law was referred to the California LawGuru lawyers, probably because you live in California. Oregon law may differ from California's in important respects.
For example, I do not believe that California has a category corresponding to "Inactive".... we would use "active" "suspended" "merged out" or "dissolved" to describe an LLC's status.
In a similar situation in California, I would advise a client to take the position that the sale was a nullity and that the documents were void. However, this position is not necessarily 100% defensible. Therefore, I would recommend retaining a local real-estate lawyer to take the necessary steps in court to formally nullify the contract of sale, the trust deed and the note.
The exact best way to plead the action will depend on nuances of Oregon law, i.e. whether to seek annulment of instruments, removal of cloud on title, quiet title or rescission of contract is a choice to be made based on knowledge of state law and procedural preferences.
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