Condo hit with lien after couple splits
Q. My girlfriend and I owned a condominium together for about five years. Last summer, we split up. We calculated how much equity we had in the condo and I paid her around half. She signed a quitclaim deed giving me her interest in the property.
I just received in the mail a letter from some attorney and a copy of something called a Memorandum of Judgment. It says some bank obtained a judgment against my ex and they have recorded a lien against my condo. It gives me a number of options of paying off the judgment.
As best as I can tell, this is a credit card that was in her name only. How can they put a lien on my property? What can I do to get this lien off my property?
A. Here's the $64,000 question: Which came first, the recording of the quitclaim deed conveying her interest in the property to you or the recording of the Memorandum of Judgment?
A Memorandum of Judgment attaches a lien to all real estate owned by the judgment debtor in the county the memorandum was filed in, effective the date of recording. So, if you recorded the quitclaim deed on Aug. 1, 2017, and the memorandum was recorded on Aug. 15, 2017, the lien would not attach to your property as she had no interest in the property on Aug. 15. If the recordings occurred the other way around, you have a problem.
To make this a teaching moment, anyone finding themselves in this situation should perform a title search on the property prior to purchasing the interest of a co-owner. If that was done (and the memorandum was recorded prior to the contemplated buyout), it is likely you would have discovered the lien and adjustments could have been made to the buyout price.
In the event the memorandum was recorded prior to her conveying the property to you, you will need to contact her and present her with the situation. Not sure how the breakup went, but clearly the right thing to do would be for her to assume responsibility for the judgment amount. If she refuses, speak to an attorney regarding your options, which will probably require filing a lawsuit against her.
Q. Next to my house there is a vacant lot that is owned by the guy on the other side of the lot. I have approached him about purchasing the lot but he is not willing to commit to anything. He's an older guy and I'm pretty sure he will be selling his property in the somewhat near future. What can I do to get the first shot at the lot when he sells?
A. Obviously his house is worth more if he elects to market it as a house plus a lot. You would probably need to convince him there is more value in selling the lot to you and the house to another party than selling the two together. Perhaps you could get a Realtor to provide estimated values to the two properties being sold separately vs. being sold as one unit to help convince him that selling the lot to you is the better choice.
Presuming you can convince him to sell the lot to you at some future date, an option agreement may provide the answer. You would pay him a certain amount today (option price) for the option of purchasing the property from him at some future date at a price agreed upon today. Maybe it could be structured as "Buyer (you) have the option of purchasing the vacant parcel at 123 Smith St. for $X at the earlier of the date the owner sells the property contiguous to the lot or three years from this date, whichever date is earlier."
The seller may not be fond of this option as it commits him to a price, presumably at today's market value. Another option would be a Right of First Refusal. Here, again you pay him something to enter into an agreement where once he receives an offer on the lot, he must present the offer to you. You then have the option of entering into a contract with the seller under the same terms as the original offer he received or allowing the seller to proceed with the original contract offer.
If you do enter into either of these types of arrangements, the agreement must be recorded to protect your rights under the agreement.
Of course, the easiest option is to just buy the property when it comes up for sale, though in the event he markets the two properties together, you would be required to purchase his residence also, which is probably not your first choice.
Regardless of how you elect to proceed, in the event you do reach an agreement with the lot owner, have a real estate attorney experienced in these matters assist you in properly documenting and recording the agreement.
• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to firstname.lastname@example.org or call (847) 359-8983.