Collecting Payments for Land Sold for Years
Jack Butala: Collecting Payments for Land Sold for Years. Leave us your feedback for this podcast on iTunes and get the free ebook at landacademy.com, you don't even have to read it. Thanks for listening.
Jack: Jack Butala with Jill DeWitt.
Jill: Hi.
Jack: Welcome to our show today. In this episode Jill and I talk about collecting payments for land sold for years. What does it mean? How to collect payments for land that you sell for years and years and years. Awesome show today. First let's take a question posted by one of our members on LandAcademy.com, our online community. It's free.
Jill: Cool. Matt asked, "I'm looking at optioning a property in Texas and just found that it has a warranty deed with a vendor's lien. Can you help me out with what this means exactly?"
Jack: Sure. You want to take it?
Jill: Go ahead.
Jack: If there's a filed recorded lien against a property in our niche here at this asset type, really in any niche, it's extremely rare to find a rural piece of land with no mortgage on it with a vendor's lien. Sometimes it's a vendor's lien. Sometimes it's a mechanic's lien. What I would do ... The short answer is this and I'll give a long answer then. I would run away from this deal.
Jill: Yeah.
Jack: What it means is that a vendor probably did some work to the property, maybe started building a house, maybe poured a foundation. You name it, [inaudible 00:01:17] road, and he didn't get paid. The guy who owns the property, he didn't pay him, so he filed a lien against it, a contractor's lien it's called sometimes. In Arizona it's called a mechanic's lien, even if it is a contractor, which is a little misleading. You do not want to buy a property that has liens on it. We should talk about that more.
Jill: I just thought of another important point on this. If you don't have ... The data that we use, we use that data because I can put in there an improved percentage of zero or null. One thing I want to say, Matt, is I'm wondering if where you're getting your data you don't have that option because, trust me, we know this. There's a lot of data out there that you don't have that option. You might accidentally come across things like this that we don't because I'm able to put that in there. There might be a structure on there, and so it has a little bit of an improvement value on it, and you weren't able to clear that out. Does that make any sense?
Jack: No, it completely makes sense. In fact, it's a great point. This is why I've never seen it probably. You're actually answering it for me. We don't see this almost ever. In fact, I've never seen it because we smoke that out through the data way. They'd never get a letter from us if there's no improvements on it. Theoretically, it's possible that you could send a ... The approved value is zero because the structure never got completed or he never pulled a permit or a bunch of reasons, but Jill is right. The way that we send letters out, offers out, people with no mortgages get the property at no improvement value.
Jill: Right.
Jack: That smokes like most of the problems out.
Jill: Right because the last thing you want to be doing is sending offers to these people. How many offers may you have accidentally sent that might have things like this? This is a whole extra bit of work that you have to do that we don't deal with.
Jack: As far as liens go we get this question a lot. I think this is the bigger question here. How do you check to see if a property has liens? We stopped doing that years ago because it's expensive and time consuming. On all the deals we've done, we've never had a lien issue. If your [inaudible 00:03:40] on it, you really want to do it. Just check Google or get title insurance. I think Title Pro 24/7, which is a product that is in our Land Academy membership bundle of tools, has a lien piece to it. In fact, I know it does.
Jill: Right.