Risk with undischarged mortgage?

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bostondan
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Risk with undischarged mortgage?

Post by bostondan » Tue Jun 11, 2019 5:00 pm

What is the risk of moving forward with closing if there is found to be an undischarged mortgage? It turns out the owner of a property we are purchasing had an undischarged mortgage when the property was previously sold. It was paid off appropriately, but the discharge paperwork (or whatever you call it) was just not obtained from the correct lender because the mortgage had been transferred.

It seems that the former seller's attorney "discharged" the mortgage from the wrong bank at that time and nobody noticed. There is title insurance held by the current seller and we will have title insurance as well.

The closing is scheduled for 6/14. Our attorney has withheld a fee from the seller's attorney that he says will be used to address the issue if the seller's attorney does not adequate address it himself. We are told it cannot be addressed in less than one week, but we close before that time.

Our attorney is advising that we do not delay the closing over this issue. Is there anything we should be worried about, or is it reasonable to move forward in a situation like this if our attorney advises us to do so?
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

London
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Re: Risk with undischarged mortgage?

Post by London » Tue Jun 11, 2019 5:06 pm

If you aren’t going to listen to your attorney’s advice, get a new attorney. Presumably you’re paying him/her for that advice.

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Watty
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Re: Risk with undischarged mortgage?

Post by Watty » Tue Jun 11, 2019 5:12 pm

London wrote:
Tue Jun 11, 2019 5:06 pm
If you aren’t going to listen to your attorney’s advice, get a new attorney. Presumably you’re paying him/her for that advice.
+1

If you are getting a mortage and the lender and the title insurance company are OK with this and your attorney is to then they likely know more than random people on a message board.

I am not an expert or anything but if you have title insurance that will cover this then I don't see that there would be a lot of risk for you.

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bostondan
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Re: Risk with undischarged mortgage?

Post by bostondan » Tue Jun 11, 2019 5:32 pm

London wrote:
Tue Jun 11, 2019 5:06 pm
If you aren’t going to listen to your attorney’s advice, get a new attorney. Presumably you’re paying him/her for that advice.
I understand your sentiment, but I value the opinions of Bogleheads, some of whom are attorneys with substantial experience. I would not listen to Bogleheads blindly over our attorney.

As a physician, I never have a problem and even encourage patient's to seek out a second opinion if they are not fully understanding the treatments I am proposing or if they have any doubts. I don't encourage them to blindly follow WebMD (i.e. don't blindly follow Bogleheads), but if they feel like researching a topic independently then I am fine with that.

We are likely to follow the advice of our attorney, but I figured it might be helpful to know if there is an issue I should bring up that Bogleheads might be aware of.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

EddyB
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Re: Risk with undischarged mortgage?

Post by EddyB » Tue Jun 11, 2019 5:40 pm

bostondan wrote:
Tue Jun 11, 2019 5:32 pm
London wrote:
Tue Jun 11, 2019 5:06 pm
If you aren’t going to listen to your attorney’s advice, get a new attorney. Presumably you’re paying him/her for that advice.
I understand your sentiment, but I value the opinions of Bogleheads, some of whom are attorneys with substantial experience. I would not listen to Bogleheads blindly over our attorney.

As a physician, I never have a problem and even encourage patient's to seek out a second opinion if they are not fully understanding the treatments I am proposing or if they have any doubts. I don't encourage them to blindly follow WebMD (i.e. don't blindly follow Bogleheads), but if they feel like researching a topic independently then I am fine with that.

We are likely to follow the advice of our attorney, but I figured it might be helpful to know if there is an issue I should bring up that Bogleheads might be aware of.
Do you give second opinions on the basis of a patient’s summary description of his or her symptoms and existing physician’s advice?

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bostondan
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Re: Risk with undischarged mortgage?

Post by bostondan » Tue Jun 11, 2019 5:47 pm

EddyB wrote:
Tue Jun 11, 2019 5:40 pm
bostondan wrote:
Tue Jun 11, 2019 5:32 pm
London wrote:
Tue Jun 11, 2019 5:06 pm
If you aren’t going to listen to your attorney’s advice, get a new attorney. Presumably you’re paying him/her for that advice.
I understand your sentiment, but I value the opinions of Bogleheads, some of whom are attorneys with substantial experience. I would not listen to Bogleheads blindly over our attorney.

As a physician, I never have a problem and even encourage patient's to seek out a second opinion if they are not fully understanding the treatments I am proposing or if they have any doubts. I don't encourage them to blindly follow WebMD (i.e. don't blindly follow Bogleheads), but if they feel like researching a topic independently then I am fine with that.

We are likely to follow the advice of our attorney, but I figured it might be helpful to know if there is an issue I should bring up that Bogleheads might be aware of.
Do you give second opinions on the basis of a patient’s summary description of his or her symptoms and existing physician’s advice?
I am willing to provide general information to a patient based on a summary description and existing advice. If I require additional information to even offer general advice, then I will state that fact and not provide that advice. I may still provide basic information that may be relevant. I do not dissuade people from attempting to ask such questions.

I was looking for broader issues regarding undischarged mortgages that I should be aware of. I was not going to print out this forum conversation and assault my attorney with it. I otherwise trust my attorney, but feel somewhat confused about this specific issue of undischarged mortgages and a quick Google search reveals that it is a known issue that may pose problems down the line. I was having trouble perfectly understanding those future issues and whether it was something large enough to warrant a delay of closing.

People on this forum frequently ask such questions and the expectation is that the advice provided here is not official and should be interpreted in the proper context.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

Yooper16
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Re: Risk with undischarged mortgage?

Post by Yooper16 » Tue Jun 11, 2019 5:52 pm

We had a line of credit when we first purchased our previous house. Paid it of, and a couple of years later refied the mortgage with a different lender.

During this time the original bank was sold and the original title agency was split into two differant companys. Things got lost apparently. We had the paperwork showing the line of credit payoff but it was apparently not registered nor did the bank remove the lien. Even the following refi- did not catch the error. Took about 20 years for the error to be found when we tried to sell the place.

Our longtime lawyer advised that we could close, if the buyers, buyers lawyer, lendors and title insurers agreed. At that point if anyone/group opposed the sale should not go through and then we would have to file against the appropriate parties to clear things up.

Because we had the payoff papers it was more of a nuisance issue than a legal problem, but it did cost a few hundred $$ to get corrected. This occurred about 10 days or so before scheduled close.

Fortunately it worked out in the end. We trusted our lawyer. Do your due diligence, but if this is a trusted lawyer that you have a positive history with I would probably go with his recommendation.

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bostondan
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Re: Risk with undischarged mortgage?

Post by bostondan » Tue Jun 11, 2019 5:55 pm

Yooper16 wrote:
Tue Jun 11, 2019 5:52 pm
We had a line of credit when we first purchased our previous house. Paid it of, and a couple of years later refied the mortgage with a different lender.

During this time the original bank was sold and the original title agency was split into two differant companys. Things got lost apparently. We had the paperwork showing the line of credit payoff but it was apparently not registered nor did the bank remove the lien. Even the following refi- did not catch the error. Took about 20 years for the error to be found when we tried to sell the place.

Our longtime lawyer advised that we could close, if the buyers, buyers lawyer, lendors and title insurers agreed. At that point if anyone/group opposed the sale should not go through and then we would have to file against the appropriate parties to clear things up.

Because we had the payoff papers it was more of a nuisance issue than a legal problem, but it did cost a few hundred $$ to get corrected. This occurred about 10 days or so before scheduled close.

Fortunately it worked out in the end. We trusted our lawyer. Do your due diligence, but if this is a trusted lawyer that you have a positive history with I would probably go with his recommendation.
Thank you for your helpful answer.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

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