Mgarv,
In my opinion, the BESt way to get a deal closed, where you secure a purchase agreement with a lender, where the agreement is NOT assignable is to simply do a simultaneous close.
This way there is no assignment at all.
Certainly there will be additional closing costs, but if you get into the deal at a low enough price, this should not be a problem.
The issue with this would be, with some lenders, “proof of funds”, since many are requiring this now days.
You would need a letter from a lender of some sort showing that you can close the deal.
and, if you are buying right, getting a hard money lender to give you this “proof of funds” should not be a problem.
That’s just my $.02, if I follow your post correctly,
Jim FL
Please help me understand this - Posted by M.garv(IL)
Posted by M.garv(IL) on August 01, 2001 at 15:14:13:
I posted a question the other day and thank you everyone who replied but I was not specific enough in my question and I am still looking for an answer.
My origial question was about getting around non-assignability clauses in the form of a land trust. Instead of assigning your contract you assign your position in the land trust. I asked how you do this. I recieved a few replies stating that you have the original owners put the properties in the land trust. But I was not clear on my question and I am wondering how you do this if you are buying REO’S from banks. They will not put a property under a land trust before you buy it so I am still not understanding how this is done. I know another option is to buy the property under an llc and just assign your position in the llc but that is to expensive in Illinois where I live.So can someone please try to explain the land trust flip for me.
Thank you ,
M.garv(IL)
I misunderstood your question (probably others did too, that’s why the land trust was recommended).
One approach is simply to not assign the contract but to do a double close or simultaneous close. In this scenario you take ownership of the property and resell it to another person within a very short period of time (probably less than an hour or two). The funds from the second buyer come into escrow and you use those funds to pay off the bank pocketing the difference (less escrow and title costs).
Many banks respond to all offers, even ones they want to accept in terms of price, by slapping their standard addendum on the back and sending it back as a counter-offer. This addendum has the effect of overriding any language you put in the original offer with their own stock phrasology. It’s also an inexpensive way of protecting themselves against people who throw weird clauses in like no proration of taxes or other stealth clauses offensive to the bank. It’s much cheaper than having a lawyer review every offer that comes in.
Some people have had success by simply crossing the non-assumability portion out with a fine pen. Often the lender’s representative won’t notice or care and it flies through. Others simply slap their own standard amendment on the back of the lender’s amendment to try to override the lender’s terms.
I recommend just doing a double-close. It doesn’t cost THAT much extra.
Re: From what I understand there is - Posted by M.garv(IL)
Posted by M.garv(IL) on August 01, 2001 at 16:29:58:
I have yet to do one yet because I want to understand everything I am getting myself into but from what I uderstand alot of banks are now putting in non-assignability clauses in their contracts so you may not just assign your contract with them to another party.Correct me if I am wrong but I have read this several times in this forum and also read it in Steve Cooks book.
M.garv(IL)