CA Attorney for Dodd-Frank seller financed questions

[John D.]

Hi All-

    I've read many contradicting things with regards to how Dodd Frank impacts seller financing, both here on BP and elsewhere.  In particular if it applies to non-owner occupied properties, or raw land, what exactly the guidelines are for the up to 3 seller financed properties per year, etc.  I'd also like to make sure I am not violating any CA usury laws.

     Can someone recommend a CA attorney that's 100% up to speed on all of this?  I think it's worth it to me to shell out for one very expensive hour or two of an expert's time, as opposed to getting this wrong.

   Also if someone has a document they can reference that provides solid background that'd be awesome too......perhaps to frame the above conversation.

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  Some of my questions are related to:

-Difference in rules between 1 property per year, and 3 per year seller financed, as an individual, or as an LLC, and what happens with multi-member LLCs and who's "count" those properties applies to

-Whether Dodd Frank applies to raw land, improved land, properties the buyer is not planning to owner occupy, etc. and if any of those are exempt, what paperwork I should have the buyer sign at closing to state this.

-In cases where balloon payments are frowned on, can you require principal reductions?

-If the interest rate is fixed, what is the max interest rate, assuming the buyer has the ability to pay?

-If there is a certain minimum loan term, or if a very short period is OK, if the buyer has the ability to pay.

-If I need to verify ability to pay from buyers who will not be occupying the property or using it as their residence.

Appreciate any help!

[Hattie Dizmond]

@John D. 

Dodd-Frank doesn't impact non-owner occupied properties and isn't designed to protect investors.  Investors are deemed to be able to protect themselves.  Dodd-Frank was designed to protect individual borrowers - homeowners - from predatory lending practices.  The best and most understandable discussion I've seen about Dodd-Frank's impact on Seller Financing is courtesy of the National Association of Realtors.  You can find it here...

http://www.ksefocus.com/billdatabase/clientfiles/172/4/1720.pdf

Depending upon what strategy you are looking at leveraging, a lawyer may or may not be necessary. Why? Because I would strongly - in the strongest way - encourage you to use an RMLO licensed to do business in your state. Leveraging them protects you from any potential liability related to seller financing. If you have more expansive concerns about Dodd-Frank's impact on REI in general, then definitely seek out the advice of an experienced real estate attorney.

One of the things that make Dodd-Frank so intimidating is the fact that the Act leaves a great deal for each individual state's discretion.  Dodd-Frank lays out some very broad restrictions & requirements and then charges the states with figuring out how they interpret Dodd's requirements and how they will implement them.  You're going to need a lawyer to sort through those. 

Hattie