Monday, June 28, 2010

Unique Title Problem

A unique title problem

Sam had a small business and he owned the real estate free and
clear. About a year ago he gets call from his buddy Fred, who lives
out of state.
"Sam, this is...." and the call was interrupted by a taped
"this call may be monitored or recorded"
"Sam," Fred continued. "I'm calling from jail. There has been a
horrible mistake and I've been arrested for financial fraud. Of course
I didn't do it. If I had, I'd be able to post the $1 million bail. Can
you help me out so I can stay out of jail and help my lawyer investigate
this mess?"
Sam couldn't bear the thought of Fred rotting in jail. So Sam put up
his commercial building as collateral for Fred's bail bond, giving the
court a mortgage lien on the property.
A year goes by and Fred hasn't gone to trial yet.
Broker Bob knocks on Sam's door with an offer to buy Sam's
commercial building. Sam is nearing retirement age and the offer looks
good, so he signs the purchase agreement.
During the due diligence period--guess what shows up on the title
work? Fred's bail bond.
Sam was really torn--he wanted to sell his building but he couldn't
let Fred rot in jail. Fred's attorney went back to court and persuaded the
judge to release the mortgage for a smaller amount of cash collateral
provided that Fred relinquished his U.S. passport.
But it took the out of state court a month to release the mortgage
before Sam's building could finally close.

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