I need legal help (Ky real estate law)

[PJ4UK]

My mother has a problem I'm hoping some legal folks may be able to help out with: "Maybe someone can help me find a solution to my situation. I'm trying to obtain a clear title to a trailer which I inherited from my brother when he died. At the courthouse I was told that the title has a lien on it. When I contacted the former owners, they deny knowledge of any lien. I wrote the bank and sent copies of all the receipts, legal papers, as well as proof of my appointment as executrix of his estate. They ignored it. These people claim to be Christian. I wonder if they believe Jesus' words when he said; "Do unto others as you want others to do to you." I also wonder if they would like to see someone do their 79 year old mother that way. I have incurred legal costs which I will collect from them if we have to go to court. Their best option is to clear the lien, and skip court and court costs. We will go there, but I would rather not. Anybody else had this problem? How did you settle it?"

If you can help with this, please let me know. My mother deserves a clear title to the trailer my uncle PAID FOR IN FULL and left to her in his will....

Tthe lienholder (the bank) is telling my mom that there is a lien on the property and the only one who can "remove the lien" is the previous owner that my uncle purchased the trailer from. It leads me to believe that a loan was taken out against the property and never paid....and that is illegal on the part of the previous owner...isn't it?? (because they either took a loan out on a property that wasn't theirs anymore OR they sold property as lien-free that actually had a lienholder against it.)

The tag office (I assume that is what mom means by "the courthouse") are the ones telling her about the lien. I don't think they have offered much assistance.

[CitizenBBN]

It's possible your uncle bought it from someone when they didn't have clear title, i.e. a lien. Did he have title work done on it, did it close with real property or was it just the trailer and no land, and finally have they provided you with a copy of the lien? Any lien like that should be field at the county court house. Are they saying someone still owes them money as part of the lien?

[KSRBEvans]

PJ, I assume the lien is on the trailer (which is personal property in Kentucky) and not on the land on which the trailer sits.

Is the brother's estate being probated in court? Has the judge formally signed an order appointing your mother as the Executrix? Is there an attorney handling the probate? The attorney should know how to deal with this.

There's a process under Kentucky law for a potential creditor of the decedent (like a lienholder) to submit a proof of claim. If that happened and they didn't submit a proof of claim, I believe there's a good chance the property can be conveyed.

If your mother hasn't retained counsel yet, I recommend she do so to help her probate the estate.

[PJ4UK]

My uncle died 3-1/2 years ago and the will has been probated. After he died and my mother had taken possession of the property, she started to try to find the title to the trailer, which she could not find in my uncle's paperwork. She has a clear deed to the property that the trailer sits on.

The transaction between my uncle and the previous owner was an owner finance situation and he paid cash to the property owners, but received hand-written cash receipts for each payment. Therefore, a deed search/lien search was likely never conducted. My uncle got a paid-in-full receipt from the prev owners, but got no title. It was a private transaction. When mom went to get the title from the courthouse they told her there was a lien on the property, which was a bank that, apparently, the prev owners had owed with the trailer as collateral. We think the loan was taken out in the 1990's and my uncle didn't buy the trailer until 2001 or 2002. I think the prev owners either sold the property with an outstanding loan with a lien on it OR they sold it without getting a lien release from the bank. We need to know what needs to be done to rectify this. Who can we go to in order to get help to get the clear title?

No one has provided proof of lien. The bank that the loan was originally purchased (Nations Bank) was bought out by another bank and that is complicating the process.

[BarristerCat]

First, let me say that it is almost impossible for any of us to come to solid conclusions about what is going on without being able to actually see all of your documentation. So, don't take what I'm about to say as gospel.

Having that out of the way, it sounds to me like your uncle (the buyer) bought a trailer from the seller, paid cash, and never checked to see whether the trailer or property were encumbered. The trailer, at least, was encumbered. That encumbrance -- the lien -- still exists and has not been released. So, that leaves three possibilities:

1. The seller took your uncle's money, paid off the loan that was secured by the lien, but did not file the lien release in the County Clerk's office. I've seen this happen before. Some banks give the customer the lien release when the loan is payed off. It is then the customer's responsibility to file it. If it isn't filed, then the property is still encumbered.

2. The lien release was filed, but not recorded properly by someone at the County Clerk's office.

3. The seller took your uncle's money and did not pay off the loan.

If it were scenario #1, the bank would most likely just issue a new lien release, but I'm having a hard time discerning exactly what the bank is telling you and your mother about all this. If they aren't claiming they're owed money, then maybe you just have a process problem and it might not be too hard to fix.

It could be scenario #2, but that isn't likely. Either way, you'd need to know whether the bank ever issued a lien release at all before you worry about that possibility.

Unfortunately, scenario #3 is the worst possible scenario for you. If the seller took your uncle's money and did not pay off the loan, then the bank is still owed money on the loan and is not obligated to release the lien. The bank has the "first and best" claim on the trailer. In effect, your uncle's claim to ownership of the trailer -- and thus your mother's -- would be void. Do you know the sellers? Are they good people? Do you believe them when they "deny any knowledge of a previous lien?" If they took your uncle's money but did not pay off the loan or convey title, then you should probably contact the local Commonwealth's attorney at some point. You're not to that point yet, though. Lots of leg work to do.

Ultimately, the best advice I can give you is to hire a lawyer that you can trust. If you don't know any, then ask some people in your area for some names. Property law is a difficult area of the law to try and figure out on your own. Plus, you're going to need to see that bank file at some point and since it appears that your uncle's name was never on any of the paperwork, the bank may not be allowed to let you see the file without a court order.

[CitizenBBN]

Great post Barrister. Like you I'm having trouble figuring out what the bank is saying. If they hold what they think is a valid lien then they should think they have title and are owed money. If they don't think they are owed money I see no reason for them to not release the lien.

Your scenario breakdown is great, and along with #3 being the worst case, it's also the most likely case. Far from an uncommon situation.

[BarristerCat]

Great post Barrister. Like you I'm having trouble figuring out what the bank is saying. If they hold what they think is a valid lien then they should think they have title and are owed money. If they don't think they are owed money I see no reason for them to not release the lien.

Your scenario breakdown is great, and along with #3 being the worst case, it's also the most likely case. Far from an uncommon situation.

Thanks. Ended up being huge! Hope I was able to help a little.

I'm afraid you're right about #3 being the most likely scenario. I hated to say it, but I pretty much figured that was what happened before I even started typing. I hope that's not the case for PJ's sake.

[PJ4UK]

Thanks, Barrister.....I am not exactly sure whether the bank is saying they are owed money or not. Unfortunately, I think #3 is the most likely case, as well. I am going to visit my mom during the Thanksgiving holiday and I intend to get more information while I am up there. My mom is 79 years old and wants to get this resolved before she dies and leaves the mess for us to have to get fixed. Bless her heart, I wish she didn't have this nonsense to worry about. Her memory isn't as good as it used to be and sometimes I get confused when she's telling me about stuff because she gets things mixed up and they don't always make sense....which is very hard to accept, because she has always been very "together" and smart. I want to help take this worry off her so she doesn't have it to upset her anymore. Thanks to everyone for your help here. I'll try to keep y'all posted on what's happening. I surely HOPE those people didn't sell my uncle a trailer and land that they didn't own.