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Wrongful Colleratal / repossession

Discussion in 'Foreclosure, Repossession, Auctions, Short Sales' started by nick2196, Mar 13, 2010.

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  1. nick2196

    nick2196 Law Topic Starter New Member

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    My question involves real estate located in the State of: OH

    My parents have been going through this process the past couple of years. This does not seem "right," and I was hoping to get some advice I could give them.

    My family owns a piece of property. The name on the mortgage, (MortA) secured from BankA is an LLC, which my family owns.

    There was a business (BizA) leasing this property. They have since moved off the premises, and no longer lease the property. BizA also coincidentally secured a mortgage (MortB) from BankA. The collateral used to secure MortB is the property owned by the LLC.

    In this case, the property is used as collateral for both MortA and MortB. We are not affiliated with BizA in any way. However, since the property is collateral for MortB, we are unable to sell the property.

    At this point, my family has no income, and are unable to pay MortA. They have just been informed that BankA will be repossessing not only the property, but also any assets they personally own. This would include their house, and RV, which are worth an estimated $400K. To make matters worse, part of the leasing agreement was for BizA to pay the real estate taxes ($34K/year). BizA is not paying the taxes, and the bank is coming after my family for the monies. 17K is past due at this point.

    We believe: It is a conflict of interest for the bank to use a single piece of property for collateral on two separate loans.

    Also, since the property is owned by LLC, and the name on the mortgage is the LLC, my family should not be personally responsible, thus their personal properties should not be repossessed.

    Does anyone know anything here that can help us out? My father worked 30 years to secure that property, which was to be his retirement income. There are still two of my sisters, and a brother all still living in the home, and all are students. My family will be evicted and will start from square one unless we can find a solution.
     
  2. jharris352

    jharris352 New Member

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    This is a big mess I see. Let me take these questions one at a time, first let me put this a little more clearly to make sure I understand it:

    1. Your family owns the LLC, the LLC owns the property.

    2. The LLC took out a MortA from the Bank securing same with the property.

    3. The LLC leased the property to a BizA who has since moved on. They were paying the lease and supposedly the property taxes. They paid the lease but not the property taxes.

    4. While on the property BizA took out a loan against LLC's property from the bank. MortB.

    5. BizA is gone and you have no money to pay the mortA so it is in default.


    If all that is right I have some observations:

    A. BankA probably required a personal guarantee and possibly cross collateral guarantees on your personal property when they made MortA to the LLC. I doubt it covers all their property but if you look into it I'll bet there is a security agreement that gives them a collateral interest in the home and maybe the RV.

    B. BizA can not use the property for collateral unless they own it, so MortB should not affect your ability to sell it. If it does then you will have an action against the Bank to prevent foreclosure.

    C. The property taxes are your problem so you have to keep track of them. If BizA was suppose to pay them then go after them in court and get the money.

    Does that about cover it?
     

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