Posted by Stacy (AZ) on June 20, 1999 at 11:49:47:
Hi, Bud-
Thanks for your reply…my rear is in gear. I am in the midst of reading Bronchick’s “Bullet Proof Corp” course, and have a time-table for forming my corp in the next two weeks. Good point. If I’m set-up correctly, I will minimize my risk of being sued.
After all of these replies, I’m going for “good enough” instead of “perfect” for now.
Thanks again for the boot.
Stacy
Help: Paralysis of Analysis (long) - Posted by Stacy (AZ)
Posted by Stacy (AZ) on June 16, 1999 at 15:03:34:
This isn’t easy for me to admit, but here it goes…
Some of you may know a little about my background, since I’ve been on this board for a couple of years (and met many of you at the CREOnline conventions). But for those that don’t: I’ve successfully been doing wholesale flips for about a year while working as a manager for a major company. I’m attempting to evolve my REI activities to include “Subject-to” deals, wraps, lease options and options, since I became convinced I was missing opportunity after opportunity by focussing on the wholesale side of the business.
I’ve educated myself to the point of knowing the “how-tos” of these strategies, and I’m ready to start, except for one thing. I’m stuck in my efforts to get all my contracts and legal documents in order. I can’t seem to get myself through this, and I don’t feel it’s wise to go forward until I know all my “tools” are safe and legal in my state.
I’ve corresponded with some of the people on this board that are simply using the documents straight out of the course materials, without passing them by a local attorney for review and modification. This is a little too risky for me, personally. There’s no way for me to know if a certain clause should be modified, deleted or added to keep me out of legal trouble. State’s laws vary in some pretty obscure ways, sometimes.
I’ve read the expert’s advice on this site through the years, that all legal documents should be drafted by me and brought to a “good” attorney for revisions. That’s where I’m stuck. For example, it took me several days just to finish a draft of a Land Contract, comparing all the different clauses from the examples in the courses I have, and several examples I printed from my county recorder’s data base. I now have a version I feel is ready to take to an attorney. But, now I’m looking at all the additional contracts and documents I need, and the task seems downright overwhelming. For example, Bronchick’s Nuts and Bolts course materials alone contain twenty to thirty various legal documents that I need to use, but how do I get them checked and modified to apply to Arizona? I think if I just dumped all these into an attorney’s lap, he’d end-up charging me several thousands of dollars to rewrite them for AZ. And what if I need to include a few clauses from a different course I’ve studied? It seems I need to do much of the work myself, and that it will take me months working at it part-time.
I can’t imagine speaking with a seller about doing a “subject-to” deal, for example, without knowing my documents are perfect, and my legal risk is minimal.
Am I just approaching this whole thing wrong? Is my mind locked into Paralysis of Analysis? I’d sure appreciate some expert advice.
Sorry this is so long, but I had to dump some frustration…
Stacy
Re: A big THANKS to All - Posted by Stacy (AZ)
Posted by Stacy (AZ) on June 18, 1999 at 17:31:23:
Reposting…site went wonky again…
You people are great. I appreciate all of your feedback; every reply has helped me, and hopefully a few more readers who are having trouble.
I feel as though a huge weight is now off my shoulders…I’ve got several solid ideas to get beyond this “paralysis”. Today I moved my big toe, so there’s hope!
Stacy
A Big THANKS to All - Posted by Stacy (AZ)
Posted by Stacy (AZ) on June 18, 1999 at 14:02:50:
You people are great. I appreciate all of your feedback; every reply has helped me, and hopefully a few more readers who are having trouble.
I feel as though a huge weight is now off my shoulders…I’ve got several solid ideas to get beyond this “paralysis”. Today I moved my big toe, so there’s hope!
Stacy
Re: Help: Paralysis of Analysis (long) - Posted by Brad Crouch
Posted by Brad Crouch on June 17, 1999 at 12:32:47:
Stacy,
As you know, I’m no attorney. But I have a couple of comments.
I have modified the top drawer of my lateral filing cabinet to accomodate legal sized folders. Then I took all the documents from Bill Bronchicks course on being your own RE lawyer and modified them all, formatting them for legal size and polishing them up a little (in terms of placing borders, making certain that all the paragraphs/clauses were sequentially numbered, etc.)
I then labeled each folder with Bills numbering system and printed each document three times on legal sized paper. One of each of those copies is for my beiefcase so I’ll have every form I could possibly need, with me all the time.
I have not yet had an attorney review the documents for applicability with California law, but I will (I sort of got sidetracked with studying the PACTrust stuff). Just not all at once . . . only the ones I plan to use right away. When I do take the documents to a lawyer (when I find one I like - like finding a needle in a haystack), I will tell him to REVIEW the documents, but NOT to alter or rewright them.
I believe that no contract is “bullet-proof”, but that the Bronchick contracts are about as close as you can get. Bill is not a stupid guy and he uses his contracts every day. But in Colarado, not in California or Arizona. So I think that getting a local attorney to review the contracts is a good idea.
Even with this “legal review” though, you should anticipate having problems at some point. That is how good contracts are made even better . . . through years of use and modification. You eventually end up with a very good contract. The essence of creating a contract is documenting an agreement that you already have, and providing for the responsibilities of each party, and preparing for unforseen events. This last part is sometimes the hardest, depending on our level of experience. I think the more experience we have, the better our contracts are.
Part of the education we receive, is the mistakes we make. I really don’t think there is an “easy way” to get the experience we crave. Hopefully, the mistakes we make won’t “break” us. I guess that’s why we depend on professional people, and their expertise to keep us out of trouble while we try new things.
The problem is that your “focus” is subject to change. You’ll learn about something new, or safer, or possibly more lucrative, and want to try that. This will mean different documents are needed. The PACTrust is a good example of different documentation being needed. All that “legal sheild” stuff means more precise documentation.
I had one attorney tell me that the lease and option agreement should be combined into one document, and that it would work very well . . . if it were written “correctly”. He was a RE lawyer, but had no clue! He couldn’t even tell me how to circumvent a DOS clause. He told me that the results of his intensive research on this subject was that it “WAS enforceable”. He didn’t know anything about trusts because this was a “different specialty” having no relationship to Real Estate. What a dork! And for $350 per hour!
If we only had a lifespan of 100,000 years or more, we wouldn’t need attorneys at all. In the meantime, we have to “make do”. The point is that you have to make finding a good RE lawyer, a time consuming project. I’m told that sometimes good RE lawyers can be found at title companies.
Hope this helps some,
Brad
Oh yes, paralysis it is. - Posted by Alex Gurevich, TX
Posted by Alex Gurevich, TX on June 16, 1999 at 23:48:28:
Stacy,
You don’t need too many bullet proof documents to do, for instance, a “subject to” deal.
I only use this set:
And finally to sell the property:
7. Contract for Deed (reviewed/prepared by attorney), or
8. Lease/Option (prepared/reviewed).
If you think of it, there are only 3 documents you may need to spend money on as far as reviewing:
Deed to Trust, Contract for Deed and Lease/Option. All of 3 total should not cost you much more than $1,500, and will likely cost less.
You really don’t need to spend $$ on letters to bank, insurance co., power of attorney, etc. – these things are hard to screw up. Even if you do, I don’t see a lot of harm coming from there.
Consider what your inaction is costing you. At 1 transaction a month it’s about 15K-35K overall profit per deal and immediate 250-600/per month added each month. Believe me you are already paying a hefty price far exceeding the costs of reviewing documents. Even if one out of 5 transactions backfired (which is hard to imagine) due to poor documents, you’d still be doing pretty well. On top of that you’ll know the weaknesses in your docs 
And as somebody already pointed out no document is perfect, even one produced by capable attorney. I am constantly revising my documents, adding clauses, removing some, rewording, etc… This comes when I find myself in a situation with buyer or seller which the attorney had not thought of.
If I had to wait until everything is perfect I may have still be working on my 1st deal (incidentally, I screwed that one up initially big time, but still made money with it in the end).
Think of your flipping business. You don’t always know that you’ll have a buyer to flip a deal to. There’s quite an element of uncertainty there and that is risk too. Even if your paperwork is full with clever weasel clauses in case you don’t have a buyer, you may still be taken to cleaners by an “unsuspecting” homeowner. However, you do take a risk.
So, shake that doubt off, get a couple of main docs reviewed and ready and get going after deals.
Re: Help: Paralysis of Analysis (long) - Posted by Cathryn
Posted by Cathryn on June 16, 1999 at 23:08:17:
I can relate. I took a contract someone on this site had been kind enough to e-mail to me to an attorney for “review.” I asked him to check it to make sure it was okay for Texas and that it would keep me out of trouble. I figured he’s add a few clauses, change the wording on a few others – I told him I had the whole contract on disc, so that I could incorporate any changes.
Instead, he wrote an entirely new 11-page contract that is so detailed I’m afraid to show it to a seller for fear they’ll run screaming. It includes an “Independent Consideration Option” clause that says I have to cough up $50 bucks any time a seller accepts an offer of mine (this is seperate from an earnest money deposit) even if I later back out because the seller has misrepresented the property. (“No free looks,” the attorney said.) I’m still trying to find out if that’s kosher; no one else in Texas seems to have contracts with such a clause.
Shucks, I think I’ll quit peering at this computer for awhile and go out and play with my newest pony. (Newborn Welsh filly by a reserve national champion sire!)
Paralysis? I dont think so. - Posted by PBoone
Posted by PBoone on June 16, 1999 at 22:00:51:
Stacy,
Many of the “deeds” in your list are very straight forward and “standard” for lack of a better term. My suggestion would be to write up your list, contact an escrow agent, take em to lunch to discuss which ones are common for your market. that will clear up your concern on “deeds” now the remaining such as L/O’s put a deal together, have enough money in the deal to hire a local atty to write it up with exactly what you want and anything else he/she may suggest same with a contract for deed.
Pat
Re: Help: Paralysis of Analysis (long) - Posted by David Alexander
Posted by David Alexander on June 16, 1999 at 17:51:54:
How about, do one more flip and allocate the money to
having your contracts made. Talk about ROI. What does your average flip get you about 3-4k. Doing the deals your talking about your average profit will go up to somewhere in the neighborhood of 15-20k.
Now another case in point, these type of deals rarely cost much money if any to get into, so you have No Risk.
Or maybe find someone doing these deals in your area, find a deal or to and flip it to them, or partner with them in trade for their paperwork.
David Alexander
I could have written this. - Posted by Jim Beavens
Posted by Jim Beavens on June 16, 1999 at 17:46:06:
I’m in the exact same boat as you, Stacy. I have all the concepts down cold, but I’m getting hung up on the details. Merging all the best parts of all those course contracts is a lot of work, and like you I got a good start, but ever since then I’ve been putting off finishing up all those documents that are left to do. The procrastinator in me rises again! Argh!
I’d also like to hear what other people have to say about this. I don’t think dumping all the pieces into an attorney’s lap and having them put it together is the answer either, since you are going to have to tell them exactly what you want to do, and the finished contracts are the best way to do that.
I too am uncomfortable with using the various forms right out of the box with no attorney review. I think we’re just going to have to find the time and the motivation to sit down and get it done. Lack of time has been my biggest problem, with my J.O.B. always getting in the way. Plus when I get home my brain is so fried that the thought of concentrating for several hours on legal forms isn’t exactly appealing. I know, excuses, excuses. Anyway, I sympathize with you.
Re: Help: Paralysis of Analysis - Posted by Matthew Chan
Posted by Matthew Chan on June 16, 1999 at 17:36:27:
I, too, have tussled over the seemingly endless number of forms that are available. I found it a fairly unpleasant experience comparing all the different versions of forms and deciding when to use it. I must have read most of the contracts word-by-word a few times as I took a Legrand contract and started modifying it clause by clause on the commputer. I even had to reformat most of them because I wanted a more “polished” look on legal paper.
I spent a few days on this project but after I was done, I really knew those contracts well and how to use them because I cross-referenced the contracts to the course tapes and text material. Talk about time-consuming and grueling. In the end, it was worth it.
I went to my RE attorney and we discussed the various issues of contracts, forms, formats, etc. He even suggested I went to the courthouse and simply make copies of “authentic” documents that were recorded and used.
Having been involved with drafting contracts in a prior life, I am pretty comfortable with making changes because I don’t think there is a such thing as a “perfect” contract. What may work for one person may not work for another. You could also make you contract so air-tight, that it becomes too scary and ultimately become a deal-killer.
Getting state-specific info isn’t too difficult. Go to the courthouse or get some Nolo Press books for some state-specific clauses.
Re: Help: Paralysis of Analysis (long) - Posted by Jimbob
Posted by Jimbob on June 16, 1999 at 17:25:05:
Stacy,
I’m a little confused, you mentioned you have been sucessfully doing flips and other investments for a while yet you are confused as to what contracts or clauses to use while doing it, I’d be curious to know how you were being sucessful if you weren’t sure what you were doing?
Anywa, have you thought about bundling up all your clauses and contracts, taking them to a local attorney and having him/her draft you up a master contract you can use over and over?
Jimbob
Get your rear in gear - Posted by Bud Branstetter
Posted by Bud Branstetter on June 20, 1999 at 03:52:36:
How ya doing Stacy? Besides moving your toes do some estate planning. Get your assets into limited partnerships, operate as a corporation, and follow a low profile. If the can’t get anything why do you worry about doing it wrong? Being a perfectionist and doing everything ahead of time is great. You’ll just get there a little slower.
Giggle! - Posted by Carmen
Posted by Carmen on June 18, 1999 at 19:42:11:
Just had to say you cracked me up! Hope your pinkie moves tomorrow!
P.S. . . . Again - Posted by Brad Crouch
Posted by Brad Crouch on June 17, 1999 at 12:52:22:
Stacy,
This board is sometimes very weird!
I forgot to ask . . . If you had an attorney REVIEW the documents in question, wouldn’t you get SOME side notes detailing which clauses were questionable? Wouldn’t you then have what you needed to re-write the thing yourself? What do you actually get when you pay for a REVIEW? If what you actually get is only a verbal recitation, maybe it would be a good idea to take along a tape recorder. Or maybe you could insist on a “written review” even if it costs a few dollars more.
Brad
and add… - Posted by David Alexander
Posted by David Alexander on June 17, 1999 at 04:46:37:
Alex,
On the sell side:
I also use a loan authorization(is that what you mean in number 5?).
and letter to the Bank(you send a letter to the bank, maybe telling them your putting property in a trust?)
On the buy side:
I use an option to buy for my buyer, when they give me cash, and it’s not enough, I give them a non-refundable option agreement, good for 3-5 days max, it seperates the buyers from the lookers.
and a buyer disclosure letter saying the property is bought AS IS and that they are aware of the potential for the loan to get called due, etc.
David Alexander
Re: Clarification - Posted by Stacy (AZ)
Posted by Stacy (AZ) on June 16, 1999 at 17:53:36:
Jimbob-
The “Purchase Contract”, “Sales Contract” and “Assignment Agreement” I use for wholesaling are simple, straight forward documents I put together myself from examples. I feel confident that they are correct. By the way, I didn’t say I have done “other investments”, I’ve only done wholesaling. These are the only legal documents I’ve needed for this strategy.
But now it’s time to move into a larger realm. Some examples:
Deed of Trust (weak version)
Deed of Trust (strict version)
Deed of Trust to Secure Agreement (Performance Mortgage)
Straight Option (pro-Buyer)
Lease/Option (pro-Tenant)
Tenant’s Purchase Option (pro-Landlord)
Tenant’s Option to Purchase Beneficial Interest in Land Trust
Assignment of Lease/Option
Deed of Trust to Secure Option
Warranty Deed to Land Trust
Land Trust Agreement
Strict Lease
Soft Lease
Month to Month Rental Agreement
Surrender of Premises and General Release
All Inclusive Trust Deed (wrap)
Subordination Agreement for Deed of Trust
Occupancy Agreement Prior to Closing
OK, that’s enough examples. It’s not necessarily my “Purchase/Sales” contracts I’m concerned about.
Thanks for your reply-
Stacy