Kelsey Realty Inc., 9200 Basil Court, Suite #550, Largo, MD 20074 (Upper Marlboro)

That Old Investment Property

May Still Be In Your Name

Years ago, you purchased a piece of property at a low price, renovated it, then tried to rent or sell it with the thought of making a quick profit. Unfortunately, you didn't get the result you were looking for. In fact, as some of you know, that investment turned out to be a nightmare, and while you may think so, the nightmare may not be over.

The purchase of that property may have left you with a piece of property that you could never rent or sell for one reason or another. This, in turn, left you responsible for the payment of a a new monthly mortgage. With no additional income from the property to offset the expenses, the mortgage quickly became past due and expenses continued to rise. You ultimately decide to file bankruptcy to rid yourself of this financial disaster.

You've heard, a Chapter 7 discharge will allow you to surrender the property back to the mortgage company, relieve you of that mortgage debt and get that property out of your name. But it doesn"t always work out that way. The bankruptcy will allow a surrender of the property and relief from the mortgage debt. However, it will not necessarily free you from legal ownership of the property.

This happens because the mortgage company, viewing the property as a loss, charges off the debt and/or never actually foreclose on the property. The foreclosure action is what removes the property from your name. No foreclosure action, no change in ownership. Over time the property deteriorates, squatters possibly take over and reconnect utilities, possibly in your name. In addition, past due notices for ground rent, property taxes and/or utility bills along with notices of housing code violations are sent to you. The result is possible civil suits and criminal charges against you - the legal owner. But despite this scenario there are options available to you.

One option is a "short sale", getting permission from the mortgage company to sell the property for as much as you can (even if it"s not all that is owed) and offering that amount of money as payment in full and a deed release. Another option is to offer the mortgage company a deed-in-lieu of foreclosure. This allows you to deed the property back over without the mortgage company having the additional expense of a foreclosure action. You may also file a suit to "quiet the title", keep the property and sell the it to another investor. This may even result in the return of some of your investment.

If you think you no longer own a piece of property, do a quick search in the county land records where the property is located. If you find you are still the legal owner, immediately contact the mortgage company. If the mortgage company is no longer in business, start with the FDIC"s website for location information. Then call them to find out what workout options are available. If you are able to workout a deal, be sure you know what you are signing! If you are unable to work out a deal, retain an attorney and/or realtor to find the right solution for you.