Ed, I agree wholeheartedly with what you have said here. I too would never be so brash with this issue if I didn’t have the means to cover the time that I am wrong!
Also I agree to take the solution that covers all of the worst case scenarios and address that first. My desire to see the language used in your case was simply my fetish to see how banks and lenders are going to push this. I have a fair collection of language that I have seen in contracts regarding the DOSC that frankly, you just wouldn’t believe!
So as always, your wisdom prevails. My desire to see the language of your contract was for my self-serving purposes only! (Unless one day I get my class action suit going and get the law amended for all of us…)
Till then, thanks for the clarification, my friend!
Due On Sale Twist - continued - Posted by Ed Wachsman
Posted by Ed Wachsman on November 08, 1998 at 07:13:35:
Hi guys and gals. Thanks again for all the brainstorming below.
Per Bill G’s request, I’ll be happy to post more of the DOS language when I return to Columbus (I’m in Little Rock) and should be able to get it on the board by Wed.
However, irrespective of the language of the particular mortgage in my deal,we should probably try to consistently work with the most inclusive approach; i.e., the approach that will work with the language most contrary to our interest.
Hmmmmmmmm…
Ed, you know I respect the heck out of you but I just can’t figure the rationale of dealing with the most “abusive” DOS language. Here’s why: It is the very language that, when taken to extremes (and I have seen some doozies) , becomes unenforcable, IMBO (B=bombastic) and therefore even LESS likely to be enforced. It’s a due on sale bluff if it is written so that the bank or lender KNOWS they couldn’t win in court…
What I would really prefer is to see the EXACT language of the one you have and dissect it. I love this issue when it is approached with proaction instead of fear.
I looked into the fruitcake for when you are in Club Fed but couldn’t find one that met my specifications.
Most of the fruitcakes I know are hiding from the DOS clause…
Posted by Ed Wachsman on November 10, 1998 at 07:46:06:
Karp -
I am not fearful of DOS clauses - I am respectful of them. I don’t think they can be totally ignored but I do think they can be dealt with intelligently and prudently. I would be more cavalier about them if I was the only person that might get “hurt” by them (read “hurt” to mean to have to deal with a loan that gets called). Though I might not care to do so, I’m usually in a position where I can cash out the loan and it is rare that I would be in a position where I couldn’t finance out of the problem.
When I place replies on this site, more often than not, I remember to keep in mind that many of the people on reading the material are relatively new and don’t have the knowledge and financial resources that you and I do. Additionally, I always try to do deals in a way that, while minimizing my risk, also doesn’t increase a seller’s risk beyond what they already have and keeps their problems to a minimum. It rarely happens that there are any questions, let alone disagreements, at a closing I am involved with (lots of disclosure and discussions before hand -everyone knows what is going to happen) and I don’t like things to go wrong after the closing.
So, my comments were meant not to be alarmist, but prudent. All I was saying was that, if you are going to have a solution to the DOS problem that you are going to consistently employ, for the sake of efficiency and to lessen the possibility for errors (and not because of fear or paranoia), use a solution that covers all of the situations - the worst one included. Then, you can essentially forget the problem and not have to read every mortgage to see what is and is not covered. The solutions offered to my scenario below by Jim Piper and others did just that.
For no other reason than to satisfy a request by one of the people kind enough to take their time to offer me suggestions, I will post the exact language of the particular mortgage that prompted my original post and question - hopefully by tomorrow or the next day when I have a chance to get it.