Opinion ID: 2714911
Heading Depth: 3
Heading Rank: 1

Heading: The Real Estate Transaction

Text: In early 2004, Doug and Karen Simonson owned a residence in Kirkland, Washington. On April 27, 2004, the property was appraised for sale at $1.1 million. Two days later, the Simonsons filed a petition for bankruptcy, listing the Kirkland residence. Based on representations that the residence property had no equity beyond the secured loans, the bankruptcy court entered an order abandoning the property. Soon thereafter, Doug Simonson, acting as an agent for Global Financial Solutions (GFS), contacted Michael Levenhagen-a potential buyer from Minnesota. GFS is a company that structures real estate investments by pairing investors with good credit with investment properties. Simonson did not tell Levenhagen that the residence property had been in bankruptcy, that he was living in it, or that he expected to receive a commission from the sale. Levenhagen purchased the property for $1 million. As part of the purchase agreement, GFS agreed to pay a buying partnership fee to Levenhagen for the use of his credit and to pay the mortgage. GFS failed to perform on its promise. Levenhagen contacted Simonson and Simonson blamed GFS for all of the issues, casting himself as a fellow victim of GFS. When Levenhagen traveled to Washington to explore selling the residence, he 3 No. 201,017-2 learned for the first time that Simonson had owned the property and that it had been involved in his bankruptcy. Simonson persuaded Levenhagen not to sell the property by telling him it did not have enough value to pay off the loans. Simonson continued to reside in the residence, while Levenhagen made the mortgage payments. In April2005, Simonson retained Jackson, who helped him set up and carry out a plan to transfer the residence so that it would ultimately end up back in Simonson's control while allowing Simonson to pull out cash along the way. Jackson prepared multiple documents to effectuate this complicated series of transfers. The plan was implemented so that on June 7, 2005, Simonson transferred his ownership interest in Network Builders LLC to Levenhagen; this transfer was not recorded. Two days later, Levenhagen quitclaimed the residence to Network Builders and sent the documents to Jackson; these documents were recorded. The reason for this pair of transactions was that Simonson wished to obtain a hard money loan on the Kirkland residence even though he no longer had an ownership interest in it. To that end, Jackson drafted a real estate excise tax affidavit and signed it under penalty of perjury as Levenhagen's agent (the affidavit was necessary for quitclaim deed to be recorded). Jackson then recorded the affidavit and the quitclaim deed. By failing to record the Network Builders transfer and recording the quitclaim deed, the public record reflected that the residence belonged to Network Builders and that Network Builders was still owned by Simonson. On June 13, 2005, Simonson obtained a $167,775.56 loan against the residence, signing the deed of trust as manager of Network Builders. Neither Jackson nor Simonson told Levenhagen that the property had been further encumbered. 4 No. 201,017-2 On June 16, 2005, still unaware of the new loan against the property, Levenhagen transferred Network Builders (and, therefore, the residence) back to Simonson. Simonson told Levenhagen that the transfer was necessary because Kenneth North wanted Simonson to be the seller to a new buying partner. Even though Simonson received substantial funds from the secret loan, he told Levenhagen that he had no funds to make mortgage payments on the residence, so Levenhagen continued to make the payments while Simonson lived at the residence. The residence property changed hands a few more times. Mark Laing owned the property in late 2005. 1 And in December 2007, David Laning took control of the property and Levenhagen was finally repaid for the mortgage payments he had made.