[WSBARP] DOT/Promissory Note

Sun Aug 2 11:27:29 PDT 2020

The land remains encumbered in whatever priority it was in under the old LLC (assuming proper recording, execution, etc.).  The new LLC should assume the obligations of the old LLC, the DOT should be amended to change the name of the borrower and any guarantor of the old LLC should sign a new guaranty for the obligations of the new LLC.  If  the lender has title insurance, an endorsement should be obtained on the policy to ensure proper vesting and no loss of priority based on the DOT modification.  If the lender doesn't have title insurance, you may want to inquire with your local title insurance company whether they would be willing to insure at this time.

It is likely an event of default under the DOT/Note for the title to transfer and the old entity to dissolve.  I recommend against ignoring the EOD.

Good luck.

Jody

Jody M. McCormick
Principal | Witherspoon • Kelley
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Kary Krismer
Sent: Sunday, August 2, 2020 10:25 AM
To: wsbarp at lists.wsbarppt.com
Subject: Re: [WSBARP] DOT/Promissory Note

One other issue.  If the old LLC has a judgment or lien against it, which may be likely since it's defunct, by going to a new DOT you'd move junior to that other interest.

Kary L. Krismer

206 723-2148
On 8/2/2020 10:13 AM, Kary Krismer wrote:

I cannot see why your seller would not still be secured or need to do anything as long as payments are being made referencing the debt.  If the DOT was valid when granted it seemingly would remain valid.  The only possible concern I see is statute of limitations, but I'm not even seeing that as an issue assuming I remember the law right on when the SOL starts to run on monthly payments (perhaps a big assumption).

As an analogy, if the grantor of the DOT was an individual and died, you wouldn't need to get a new DOT from the heirs.  Or if the old LLC had conveyed to another person/entity, you wouldn't need a new DOT from them.

And in any case, the new LLC probably would not be the grantor of a new DOT, at least not until they can claim by adverse possession or some such thing.  They seemingly are not in the chain of title at all.  Wouldn't the members of the old LLC be the current owners?

Kary L. Krismer

206 723-2148
On 8/2/2020 9:32 AM, Kristina Driessen wrote:

I have a client [LLC] who sold to an other LLC with personal guarantee back in 2006. This was accomplished via DOT/promissory note with my client being the bank.

It just came seller’s attention that the buyer LLC was dissolved in 2008. He opened a new LLC and has been paying every since. My client has been sending the tax info to buyer in the name of the old LLC since 2006.

Fast forward to today.  Client obviously wants to secure his interest.  What is the fastest way to do this…….Reconvey the original DOT/promissory note,  and start over or can an assignment with seller consent accomplish the same thing?

Looking for the best practice and/or the expedite way to accomplish the same and your experts thoughts.

Thanks in advance

Kristina A. Driessen
“A” Street Legal Services, Inc. P.S
Attorneys at Law
16 A Street SE
Auburn, WA. 98002
(253) 939-0811
(253) 939-0471 fax
astreetlegalservices.com
kristina at rdattys.comcastbiz.net<mailto:kristina at rdattys.comcastbiz.net>

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