Got One On- Need Help w/ Paperwork!!!! - Posted by chris

Real Estate Investing
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Posted by Rich on March 27, 2006 at 09:46:55:

I just read a quote from Penn of the comedy team Penn & Teller where he said that he once thought the way to make sure things worked out was to have a really good contract. Now he believes that contracts aren’t worth the paper they are written on, that the way to make sure things go well is to only do business with people you’d trust on a handshake. Reagan once said about trusting the Soviets to fulfill treay obligations: trust but verify.

The impression I get from reading a lot of these posts is that many of the people here aren’t honest enough to do a handshake deal with because they treat their agreements (contracts, including lender Notes) as something that only really binds the other party. I have had tenants do that, figuring it was too expensive to waste time chasing them down. I always send them to collections and wack their credit reports because I see it as a service to other owners who do their due dilligence- so they won’t get suckered.

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Got One On- Need Help w/ Paperwork!!! - Posted by chris

Posted by chris on March 24, 2006 at 23:10:37:

Subject To:

She has 3 existing judgements attached to the property, in addition to the 30k mortgage she has with guy who owner financed for her (and is starting forelosure).

I plan to try and get the 3 judgements discounted so that any extra proceeds go to me, not to her.

How does the language need to be stated, and does it go on the deed or the contract?

Also, on this deed I made using a few from the clerks office, where it says who prepared the deed I put my own name and address. Is that ok, or is it conflict for a party of the deed to also be one who prepared the deed?

Thx,

Chris

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Randy (SD)

Posted by Randy (SD) on March 26, 2006 at 09:36:36:

Simply state your intentions in plain English, it appears by the numbers posted on the seller is to receive $15,000 after all liens and judgments are paid. In a separate addendum to the purchase agreement spell it out… "this purchase agreement is contingent on existing payoffs KNOWN as of the above date, the seller (name) is to receive $15,000. Should any lienholder or judgment accept a lesser amount, that amount shall be applied as a credit on the buyers side of the HUD- 1 settlement statement (adjustments for items unpaid by seller line 213) “Discounted Payoffs”.

As Joe Kaiser stressed… you need to get an attorney or competent escrow person to close.

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Joe Kaiser

Posted by Joe Kaiser on March 25, 2006 at 24:17:00:

She owes THIRTY THOUSAND DOLLARS. THIRTY THOUSAND DOLLARS
is a lot of money. You are taking over a debt of THIRTY THOUSAND
DOLLARS and will now be responsible for THIRTY THOUSAND DOLLARS.

Why would you chance screwing it up by attempting to do things you
have no business doing (like creating deeds)?

Chris, this is why they make attorneys. It won’t just cost you $200, it’ll
keep you from losing THIRTY THOUSAND DOLLARS.

You need to be able to sleep at night knowing you’re covered. You do
that by hiring professionals to carry you over the rough spots. Run to
an attorney so this thing gets done right.

What’s the property worth?

Joe

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Chris

Posted by Chris on March 25, 2006 at 07:40:57:

Ok Joe, I will. But still need help with contract language. She basically signed a blank contract, but I need to get wording right.

Appraised at 97k
Comps are 110
Need maybe 5-7k cosmetics
she has 18k in judgements that attach
she has 30k owed on mortgage to owner financer
Mortgage in default 7 months. Foreclosure started.

I got a contract for 63k. 500 up front, 1500 when she turns over the house and keys (within 2 wks)

I want to short sale that 18k in judgements and have benefit of that action help my bottom line, not sellers. Need wording for contract.

Thanks,

Chris

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Joe Kaiser

Posted by Joe Kaiser on March 26, 2006 at 03:07:31:

I suspect the attorney can help you with as well.

Joe

P.S. How is a comp value different than an appraisal value? What are you
saying?

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Rich

Posted by Rich on March 25, 2006 at 11:11:20:

On the liens, what kind of liens are they? Tax liens, mechanics liens, medical bills? It makes a difference on whether or not they will negotiate. The government does not usually negotiate unless they don’t want to deal with a property and in many states property tax liens automatically take first position, which means they have almost no incentive to reduce what is owed.

How much penalty, interest and so on are associated with the mortgage? You might be better off negotiating an immediate sale from the lender. Since its a seller carry back, its not likely he wants the property back, so you could get the property for: 18K + 30K = $48K rather than 63K to the soon to be former owner. I’d skip the foreclosee and see what I could put together with the mortgage holder.

In most states the Warranty Deed and other forms are very simple documents. Just make sure you copy the legal description carefully from the existing deed so they record it correctly. If you write it up, then you are the preparer. There is no conflict here unless its not a legit deed, in which case itidentifies who gets arrested.

If these numbers are solid, I don’t see any problem with this deal. $30K is a really small mortgage.

One more thought - do you know what the seller paid for the property?

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by John

Posted by John on March 25, 2006 at 10:02:08:

You say you have a contract for 63K. I am sorry but I do not get your numbers. 18K judgements plus 30K mortgage plus arrears ??? plus 2K to seller equalls 50K plus. Are the late fees 13K? If not where does the remaining money go?
With a set purchase price that includes the judgements. You can buy or negociate the judgements to a lower amount the profits would stay with you not go to the seller.
Sorry but I have not had my coffee yet>

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Joe Kaiser

Posted by Joe Kaiser on March 26, 2006 at 03:10:17:

Rich,

Don’t think it’s ever a good idea to create your own deeds . . . can you
esplane what you’re thinking?

Joe

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Rich

Posted by Rich on March 26, 2006 at 10:48:04:

A deed is just a form you fill out and record with the county. If you already have title through a recorded deed, then modifications are just paperwork as long as its got the signature of the owner of record.

In Arizona the Warranty Deed (ones I have prepared for myself) are one pagers (unless you get wordy). The owner of record needs to sign them and then you get it recorded. We did this to move properties into our LLC. I used blanks sent to me by the Title company, modeled it on the ones created when the property was purchased, and sent it in with the fee.

Unless you live in a state that has complex deeds or have a property that does not have a recorded deed either through being grandfathered from prior to the recording of deeds or being in a state where they don’t record deeds, then its a very simple process and it does not matter much who fills out the form, what counts is who signs it.

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Re: Got One On- Need Help w/ Paperwork!!! - Posted by Joe Kaiser

Posted by Joe Kaiser on March 27, 2006 at 24:37:41:

I used to think this way too, but it turns out what you save (a couple
hundred bucks, tops) isn’t worth what you lose.

And what you lose is credibility should that seller decide to unwind
your deal. Yes, I know it doesn’t happen often, especially with the
typical deal investors do today.

But, if you’ve just created a monster profit and now the seller catches
wind of it and decides he’s unhappy with the deal you two signed up,
the kitchen table closing is his “get out of jail free” card.

There’s a big difference between walking into a title company and
having some escrow gal tell you where and what to sign, and signing
on the hood of some investors car.

Hood top closings, like kitchen table closing, are impossible to explain
to the judge. It’s one thing for the seller to be confused at the title
company. They’ll explain everything to clear up any confusion he has.

But a Denny’s closing?

There’s no way to overcome the seller’s claim that he didn’t know or
understand what he signed . . . and now he’s got an open door directly
into unwinding your deal.

Me, I’d pay the $200.00 and slam that door shut. Heck, I’d pay 5 times
that.

Kitchen table closing smell funny and they can be contorted by even an
unclever attorney to make you look like the source of that smell. I’d do
whatever it takes to avoid being stink positioned.

Yes, stink positioned . . . not a good thing.

Joe