I have been asked countless times to make a deed to “just give back” someone’s property to the bank. The question implies that if I simply knew a little more about real estate I could, like Elizabeth Montgomery, just wriggle my nose and make it go away.
Real Estate professionals know that acceptance is a necessary element of a valid deed. There are others, of course, and acceptance is generally presumed. But even though the economy has changed, legal rules have not. You can’t force anyone, not even the bank, to take real estate they have no desire to accept. Even if they want the property, the banks have insisted on taking it at their own time, and with their own conditions. Today there’s lots of property that we’ve managed to mess up so much that nobody wants it, at least not without conditions.
For instance, some condominiums have been marketed as timeshares. Such units can be a wonderful investment-if they are used, and if the developer, or the unit owners, are successful at managing the property. But before too many years the owners get divorced, file bankruptcy, die, or simply quit taking the trips they were once taking. Their lives change, and they no longer need or want the timeshare unit. The assessments go on forever. Resale of those units often conflicts with the Developer’s timing, who still has units to sell. The ghosts of those units live on and on in the form of assessments. Owners of these units can’t make someone take them, and they can’t even leave them to an heir unless they’re really trying to get even with someone. They can’t escape the monthly assessments, even by dying. Usually neither the developer nor the association will voluntarily retake the title.
The same thing has happened with mortgaged property. Property that is over-mortgaged is not an asset. The big banks that made those loans don’t want to own the property. They only used the property as a medium to sell mortgages. Banks will postpone foreclosure until the asset fits conveniently in their portfolio. Even if there are no monthly assessments, bank examiners have no line item in their instruction books for the best interests of the borrower. Their sole consideration will be the banks’ balance sheet. When they take back a property will be timed to meet the bank’s convenience, not yours.
The bottom line is that I can prepare a deed. You can even sign it. But merely putting it in the mail is not enough. The Grantee has to accept the deed.
Enter the real estate lawyer with his now tattered superman cape. The truth is that even the best of us can’t “just deed it back” to the lender. The lesson is, unless you are comfortable that you can sell the property without loss, or you have the ability to hold title over time, don’t buy real estate. All the late-night television ads you can stack up can’t possibly overcome the intellectual dishonesty of buying property with the intent to dump if it doesn’t work out.
