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  1. #1

    Default Remainderman Interest in Foreclosure

    My question involves real estate located in the State of: Arkansas

    I am Mom's POA. Mom took out a mortgage on her home and 1 year later QCD a remainderman interest in the property to another family member and retained a life estate for herself. The property has been foreclosed and there are excess proceeds. As I understand it AR code 18-50-109. Disposition of proceeds of sale states.

    The surplus, if any, to the grantor of the trust deed or to the successor in interest of the grantor entitled to the surplus.

    My question is, since the trust deed predated the QCD creating the life estate and remainderman and that trust deed is what was foeclosed on, who gets the surplus? Are the remainderman's interest extingushed by the forecloser?

    Thanks

  2. #2
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    Default Re: Remainderman Interest in Foreclosure

    Quote Quoting confusedinAR
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    I am Mom's POA.
    No you're not. A "POA" is a document, and you're not a document. I assume what you mean is that your mother executed a POA that names you as her agent/attorney-in-fact.


    Quote Quoting confusedinAR
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    Mom took out a mortgage on her home and 1 year later QCD a remainderman interest in the property to another family member and retained a life estate for herself.
    I assume "QCD" means that she signed a quitclaim deed that created the life estate.


    Quote Quoting confusedinAR
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    As I understand it AR code 18-50-109. Disposition of proceeds of sale states.
    Not sure if you're saying anything other than that the statute you cited is titled "Disposition of proceeds of sale."


    Quote Quoting confusedinAR
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    who gets the surplus?
    Assuming all persons mentioned in sub-sections (1)-(3) have been paid in full, as you noted, "the grantor of the trust deed [or his/her successor in interest is] entitled to the surplus."


    Quote Quoting confusedinAR
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    Are the remainderman's interest extingushed by the forecloser?
    Yup.

  3. #3
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    Default Re: Remainderman Interest in Foreclosure

    I do not agree. In the case of a life estate, the life estate has a value which can be quantified when the property is sold. However the remainderman interest is also quantifiable. In my opinion the surplus should be divided between the grantor of the trust deed and the remainderman, in the quantifiable percentages that would have existed had they sold the property outright.

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    Default Re: Remainderman Interest in Foreclosure

    Quote Quoting llworking
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    I do not agree. . . . In my opinion the surplus should be divided between the grantor of the trust deed and the remainderman, in the quantifiable percentages that would have existed had they sold the property outright.
    What is it that you're disagreeing with? All I did was quote the statute. Are you claiming that I inaccurately quoted the statute? If not, there's nothing for you to disagree with, and it appears that you are merely expressing a baseless opinion about what "should" happen, regardless of what the law says. Or are you basing your disagreement on some un-cited Arkansas case authority that modifies the application of the statute in a situation such as this?

  5. #5

    Default Re: Remainderman Interest in Foreclosure

    Yes, I am her attorney in fact and it was a quitclaim deed that established the life estate. They didn't sell the property, a trust deed she signed a year before the quitclaim deed allowed the mortgage holder to sell the property to recover it's interest. All other creditors have been paid. What I am asking is, should the surplus be split according to the life estate/remainderman tables or should it all go to mom because the trust deed that led to the forecloser predated the life estate quitclaim deed?

  6. #6
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    Default Re: Remainderman Interest in Foreclosure

    Quote Quoting pg1067
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    What is it that you're disagreeing with? All I did was quote the statute. Are you claiming that I inaccurately quoted the statute? If not, there's nothing for you to disagree with, and it appears that you are merely expressing a baseless opinion about what "should" happen, regardless of what the law says. Or are you basing your disagreement on some un-cited Arkansas case authority that modifies the application of the statute in a situation such as this?
    You’re reading the statute without considering the fact the grantor has treansferred their interest excepting the life estate to the remainderman. So, while the statute states any remaining goes to the grantor of the trust deed, grantor has deeded their interest, which the excess represents, to the remainderman.

    Quote Quoting confusedinAR
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    Yes, I am her attorney in fact and it was a quitclaim deed that established the life estate. They didn't sell the property, a trust deed she signed a year before the quitclaim deed allowed the mortgage holder to sell the property to recover it's interest. All other creditors have been paid. What I am asking is, should the surplus be split according to the life estate/remainderman tables or should it all go to mom because the trust deed that led to the forecloser predated the life estate quitclaim deed?
    Not only has she transferred her interest excepting the life estate to the remainderman, she is responsible for losing the home to the lender due to not paying the mortgage

    btw, when there is a mortgage there is not a trust deed as they are both means of asserting a lien on the property, they do it in different means. Since op used both terms in the original post, I’m curious as to whether there is a trust deed or a mortgage. It won’t change who untilmately is due the excess value but merely a curiosity on my part

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    Default Re: Remainderman Interest in Foreclosure

    Quote Quoting confusedinAR
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    My question is, since the trust deed predated the QCD creating the life estate and remainderman and that trust deed is what was foeclosed on, who gets the surplus?
    The mortgage or trust deed (it is not clear which it was, and they are not exactly the same thing) was granted prior to creating the life estate. Thus, the mortgage lien or trust deed encumbered the entire property. When she did the quit claim to create the life estate, both the life estate and the remainder interests were thus subject to that lien/trust deed. Upon foreclosure, any excess proceeds would, per the statute, go to the grantor of the trust deed (or mortgage) or her successor in interest. The remainder persons are successors in interest with respect to the remainder interests they received. Thus, your mother and the remainder persons would be entitled to those proceeds. How the the split would be done would depend on more information that we don't have here.

    Quote Quoting confusedinAR
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    Are the remainderman's interest extingushed by the forecloser?
    Yes. Both the life estate and the remainder interests are lost in the sale, with the successful buyer taking all the rights they had in the property. In short, the property is gone.

    If the house was worth enough to have excess proceeds in a foreclosure/trust deed sale then your mother and the remainder persons appear to have screwed up. If the loan payments couldn't be paid, they'd have likely all come out better by doing a regular sale of the property and paying off the loan — the sale price likely would have been higher, with more excess for them to share.

  8. #8
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    Default Re: Remainderman Interest in Foreclosure

    I’m curious as to why the remainderman didn’t seek to pay the mortgage and remove the tenant due to her failure to maintain the payments on the loan. It would seem there was a lot of concern or knowledge of their rights in this situation.

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    Default Re: Remainderman Interest in Foreclosure

    Quote Quoting confusedinAR
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    What I am asking is, should the surplus be split according to the life estate/remainderman tables or should it all go to mom because the trust deed that led to the forecloser predated the life estate quitclaim deed?
    Please feel free to click the link to the statute in my prior response and read what it says. If you want to discover if there is case authority that compels some other result, you'll need to consult with local legal counsel.

    Quote Quoting jk
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    You’re reading the statute without considering the fact the grantor has treansferred their interest excepting the life estate to the remainderman. So, while the statute states any remaining goes to the grantor of the trust deed, grantor has deeded their interest, which the excess represents, to the remainderman.
    Your assertion that I have not considered this fact is erroneous. I don't disagree that, in the absence of the statute, it might be logical to think that this fact is relevant. However, the statute does not make it relevant. In the absence of case authority that says the statute does not operate pursuant to its plain and unambiguous terms in a situation like this, all anyone here can intelligently do is point to the statutory language and suggest that the OP seek advice from a local attorney.

  10. #10
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    Default Re: Remainderman Interest in Foreclosure

    Quote Quoting pg1067
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    Please feel free to click the link to the statute in my prior response and read what it says. If you want to discover if there is case authority that compels some other result, you'll need to consult with local legal counsel.



    Your assertion that I have not considered this fact is erroneous. I don't disagree that, in the absence of the statute, it might be logical to think that this fact is relevant. However, the statute does not make it relevant. In the absence of case authority that says the statute does not operate pursuant to its plain and unambiguous terms in a situation like this, all anyone here can intelligently do is point to the statutory language and suggest that the OP seek advice from a local attorney.

    well, you do seem to have ignored what the statute does state

    4) The surplus, if any, to the grantor of the trust deed or to the successor in interest of the grantor entitled to the surplus.



    The remainderman is a successor in interest.

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