Re: Subject to questions in IL - Posted by Jim FL
Posted by Jim FL on October 29, 2003 at 02:39:58:
I used to invest in Illinois, to let me take a stab and give you my non lawyer laymans take.
Although your one question, is this legal? should be asked of the attorney.
Seriously, ask them, “If I don’t add these things, is the deal still legal and binding?”
One other thing, are these just clauses within the agreements, or seperate documents all to themselves.
If they are included in the agreement, don’t sweat overwhelming sellers.
The over all intent and purpose of the document is what they really pay most attention to when presented with a solution correctly.
Now, you asked:
“1. Governmental Compliance. Parties agree to comply with the reporting requirements of the applicable sections of the Internal Revenue Code and the Real Estate Settlement Procedures Act of 1974, as amended.”
Like I said, if this is just an added clause, should not be an issue. I never used this, but since in my opinion no cash should change hands, at least from you to the seller in a good sub2 deal, why is this an issue at all?
Just do a HUD-1 with each transaction, either the lawyer, title company, or you can do this, depending on where you close.
“He said whoever handles the money is required to fill out a closing settlement statement. This is for capital gains that the seller will incur. He said this may be a 1099 or so, he doesn’t know for sure because the title company usually handles all of this. Another point he makes on highly recommending I do a closng like this at a title company rather than over a kitchen table.”
First, of course he wants you to close at his office, he gets paid that way.
Frankly, if he is not sure what docs get filled out at close, then he is not the attny I’d want on my side.
You can do the close at home, the subject property, a bank, mickey dees, where ever you can get a notary to show up and some witnesses, if needed. (As I recall, in Illinois, in order to record a doc, all that is needed is a notary, but some states require witnesses, check this with the county recorders office.)
Now since most deals where we buy sub2 are from owner occupants, and for loan balance, where does capital gains come in?
The sellers are responsible for their tax issues, and you are not qualified, and should not give them advice for this.
If you close at a title company, they will furnish each party with a HUD-1 of the transaction.
If you merely get title insurance, or a title search and sign the docs/deed yourself, then you prepare the HUD-1, or hire someone to do it…not your attny, since he seems to be a bit lost on what to do for closing docs etc.
I just do my own HUD-1’s, and always have when buying.
Selling is different, because buyers come in with loans, so we just close with an attny…they do all the paperwork as part of their fee.
“2. There is a declaration of transfer for the county and state as well as each city. The ordinance requires the seller to pay for the transfer tax stamps on county/state and water bill needs to be current. The buyer needs to pay city transfer tax typically.”
I’d ask the attny some questions. When buying sub2, as prescribed here and other places, by using a trust, you are not really buying the property.
The seller is deeding the property to a trust, which is personal property, and then selling you the trust, via beneficial interest assignment.
No transfer tax due.
Some say different, so check various legal opinions from pros, don’t take my word, this is just based on my personal experience.
I used to buy a lot of houses in on city in Illinois that had a tax stamp for every house sale.
A house transferred into a trust was exempt from that as well.
I would put a clause in the contract that the sellers make sure the water bill is current.
Those can attach to the property, as I recall in Illinois.
Again, check to verify, but I seem to recall that.
There is a tax decleration form you need to complete when recording the deed.
The recorder should be able to tell you how to complete it.
The deed, transferring the property into a trust is exempt from transfer tax, so you fill the form out to that effect, signing as the agent, or what ever authority you are recording the deed under.(Trustee maybe?)
“Can I instead handle all of the taxes or is this illegal? How would you go about ths whole process?”
What do you mean "handle all the taxes?"
What do you mean exactly, because your question makes no sense to me.
What taxes are there to pay, other than property taxes?
“3. Plat of Survey”
This will be required for when a buyer gets a loan to purchase.
Unless there are buildings, or something very near a lot line, or some question as to boundries, or entry/exit points to a property, or fence placement etc, I don’t do a survey.
A needless expense in most cases when buying newer residential real estate in subdivisions subject to.
I think your attny is a conventional closing type, who seems to need to justify his fee for the agreements.
Beleive me, I went thru several of them myself.
Sadly, my old lawyer in Illinois has since moved to a warmer climate.
I wonder where he got that idea?
Otherwise, I’d refer you.
Call a few other lawyers and interview them for employment.
Remember, you are the one paying, so your are the employer/boss.
Take charge, and find a qualified or educatable team member.