5th/3rd Has Lien on Great Hunter!

[Grits]

All bank's have divisions, each division important to, and a part of, the loan documentation process.

And like I said, all of this will, and should be, in order when going to COMMITTEE for review, and prior to disbursement of all funds.

Things may have changed since I was in CLA, but I know today a bank still doesn't grant one individual this level of authority.

[ddthetide]

this appears to be a bank screw up? so how can they go after reddam? shouldn't they be after the previous owner?

[jman5581]

Is there some kind of "title company" equivalent for horses? Maybe Chuck can answer that because he buys horses pretty often. Seems like someone ought to be checking the "title" to see if there is a lien just like one would do for a house, or a car.

[Sightseek]

Originally Posted by jman5581

Is there some kind of "title company" equivalent for horses? Maybe Chuck can answer that because he buys horses pretty often. Seems like someone ought to be checking the "title" to see if there is a lien just like one would do for a house, or a car.

I've never seen the practice of one checking with the county clerk for judgments & liens on a seller of a horse. (I've always felt in my very brief employment dealing in blood-stock that the industry would be better served acting in the matter of real estate transactions and this is a good example of that) I'm sure Reddam's attorney's are now searching for when, in fact, a judgment was filed and if it occured before or after the sale. Every action also has it's own set of rules as well. For example, Mortgage Foreclosures and Tax Foreclosures differ in what liens they are superior to etc.

I gather that Reddam notified the Jockey Club of his new ownership and at that time there was no question as to the owner of the horse on the registry. One would think that a judgment holder would notify the Jockey Club of any claim they are making on the horse, but I'm not entirely certain if that is the case.

[Grits]

Originally Posted by Sightseek

I gather that Reddam notified the Jockey Club of his new ownership and at that time there was no question as to the owner of the horse on the registry. One would think that a judgment holder would notify the Jockey Club of any claim they are making on the horse, but I'm not entirely certain if that is the case.

It is quite possible that when Mr.Reddam paid for the horse last June there was no problem with the transaction, certainly not any that he was aware of. The sale went through fine, everybody's happy.

Now, here's a scenario, and not to say that this is the case, but I assure, it happens.

Customers walk into banks every day for commercial borrowing. In doing so, they must present their current personal financial statement listing all of their assets, (personal property, business, etc.) and their liabilities, (if any and there usually are). Now, this person's net worth/assets indicate, or qualify as evidence of his ability to repay monies to the bank.

You could call it borrowing against one's name, one's reputation, even.

In doing so, the bank will extend that individual an annual "Line of Credit", which must be paid out, once a calendar year for 30 days, consecutively, in order for it to be renewable. If this individual has borrowed against his line of credit during that year, it is due on a given date.

Ok, now, let's say this person encountered financial trouble--a cash flow problem after having used, already, what the bank has extended to him. He's got a buyer for a horse that he owns. He knows this can pull him out. All of this takes place several months, weeks or whatever, prior to his annual note/line of credit coming due.

He sells his horse for $500K, as happened in the case of Mr.Reddam purchasing Great Hunter. There is NO LIEN at the Jockey Club Registry because the loan held by the bank to the previous owners is NOT IN DEFAULT at the time of the sale.

Only when the loan has become past due does it go into default. And in this case, the Whetstone's are apparently on the lam.

[Sightseek]

Originally Posted by Grits

It is quite possible that when Mr.Reddam paid for the horse last June there was no problem with the transaction, certainly not any that he was aware of. The sale went through fine, everybody's happy.

Now, here's a scenario, and not to say that this is the case, but I assure, it happens.

Customers walk into banks every day for commercial borrowing. In doing so, they must present their current personal financial statement listing all of their assets, (personal property, business, etc.) and their liabilities, (if any and there usually are). Now, this person's net worth/assets indicate, or qualify as evidence of his ability to repay monies to the bank.

You could call it borrowing against one's name, one's reputation, even.

In doing so, the bank will extend that individual an annual "Line of Credit", which must be paid out, once a calendar year for 30 days, consecutively, in order for it to be renewable. If this individual has borrowed against his line of credit during that year, it is due on a given date.

Ok, now, let's say this person encountered financial trouble--a cash flow problem after having used, already, what the bank has extended to him. He's got a buyer for a horse that he owns. He knows this can pull him out. All of this takes place several months, weeks or whatever, prior to his annual note/line of credit coming due.

He sells his horse for $500K, as happened in the case of Mr.Reddam purchasing Great Hunter. There is NO LIEN at the Jockey Club Registry because the loan held by the bank to the previous owners is NOT IN DEFAULT at the time of the sale.

Only when the loan has become past due does it go into default. And in this case, the Whetstone's are apparently on the lam.

Which again shows why there should be greater controls in the blood-stock business. I don't know the answer to this question, but I wonder if a UCC-1 would be filed on the horse in that instance, which could have been easily searched for although I'm sure someone wouldn't think to do so prior to purchase.

[Grits]

Sightseek, Paul Reddam is one of the most successful owners in thoroughbred racing. He doesn't make small errors due to lack of research. He has people to take care of such.

He founded DiTech Mortgage Co. This is a man that sued GMAC for 200 million and won.