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Construction Lien, Law Suit Settled
No one wants a law suit, right? Home owners started moving into their new Starpoint Condos just over three years ago. Within three months from closing they were served with notices their was a foreclosure law suit being served on them.
The home owners went balistic. What was up? Emergency meetings were held, attorneys were hired, it was upsetting to all.
What happened was that the developer GMP Homes was an early casualty to the real estate implosion and was unable to pay their contractor Norcon Construction the approximately $1.5 million owed.
This is an example of why you have title insurance. If filed properly and the construction contract performed exactly the lien could become a first mortgage on the Starpoint owners residences.
At the same time GMP was in default on the construction loan. Ten units were not sold, so the construction loan was not paid. This complicated the matter with this loan also filing foreclosure on the remaining unsold units. This is the simple version, it is actually more complicated, but not necessary to this article.
The home owners were insured against this up to now rare circumstance by First American Title Insurance Company, the title company on all of the purchases. Mortgage lenders require this to protect their first position. Where you would think the mortgage was a first mortgage, the lien rights supersede that, the lien is the first mortgage in this case.
First American, as the Starpoint home owners insurer, defended the law suit by hiring a law firm to represent the home owners. Had they lost they would have paid the claims of the Norcon lawsuit.
As what happens in many cases, the Norcon law suit was settled out of court. The Starpoint home owners recently received a letter from their attorney stating that the terms were undisclosed but they would be paying Norcon a large sum of money, the receipt thereof would free their policy holders of the cloud on thier titles.
There are about 10 Starpoint units currently for sale at marked down prices. Sure the market hurt, but units haven’t been selling in Starpoint. As an agent I understand. What agent wants to sell a home to a client with a foreclosure law suit in process? Not me and I live here! I know of few REALTORS (c) that want to put themselves or their clients in any iffy situations.
We really love our Starpoint Condo. I would say the things I like best about living here are: The underground parking garage, the elevator access to our home, some of our great neighbors, the quality of the construction, the views, the convenience of lock and leave, being in Issaquah Highlands, and having my fabulous wife Kathleen to share it with.
Larry Cragun
