How to protect my wholesale interest?


#1

Hi All,
Thanks in Advance–

I have a pre-foreclosure just in contract. Three weeks till foreclosre, seller bailing. I want to assign the contract to a rehabber, and just be the wholesaler.

I have a list of about a dozen rehabbers to contact. What do you do to protect your interest in this? What if a rehabber approaches the seller behind my back, and offers them more money than we have agreed on, and seller bails on our contract and goes direct to rehabber.

Of course there’s a “contract”, or small claims lawsuit could be the answer if in fact needed, but the seller is in foreclosure–no money, and not really worth pursuing if I lose it. Don’t want to lose it though. Plenty of equity for assignee, I am only making $6500 on it.

My first time out of the gate on this…so thanks. Title is clear, can I cloud title somehow in the interim? (California)


#2

I tried similar deals and my attorney suggested filing a “memorandum of agreement” at the county clerk’s office to secure it. See:

http://www.dealmakerlibrary.com/how-to-use-a-memorandum-of-agreement-to-protect-your-deal.aspx

If you’re new at this, have a local lawyer guide you through this. I stress local since practices vary from area to area. My attorney advised me that:

  1. Since the seller can sign more than one contract, the first memorandum of agreement filed is the good one. Must be notarized.

  2. The purpose is to cloud the title if someone goes behind your back, but is not 100% foolproof. Depends on title companies in your area, and they might miss it, or ignore it.