Posted by John Merchant,JD on July 19, 2002 at 16:48:59:
…unless you do CYA with full, total, open and complete disclosure of the whole deal, including the possible risks to the seller, this is a worst case scenario of what COULD happen.
My home state, WA passed legislation, maybe 10 years back, dealing with “equity skimming” by REIs, specifically enacted just to protect the seller victims who were being scammed and harmed by unscrupulous buyers…who certainly did NOT in any way inform the sellers of what was really happening.
I buy subject-to myself, and certainly do utilize trusts, other entities in my own RE activitiies, but I myself am scared enough about the possible adverse consequences, that I do try to disclose and divulge enough info so the Seller can never say he/she was blindsided or baffled by BS to his/her financial disaster or detriment.
If my first comment on this matter scares those who might be contemplating dealing with sellers on these terms, then I may have actually committed a public service here.
In departing the subject, I’ll just say it never hurts to be careful. And if full open and total written disclosure does scare off your seller, just move on to the next seller who might be so motivated to sell that he/she is willing to take the risks-knowingly!