LLC buyout for contract in a wholesale deal

[Marty Happle]

I have some deals that I am looking at that my realtor friend has been trying to wholesale for a wholesaler  :)  .  

There is a wholesaler who wants the fee for the LLC that has the contract. Now, I think this is a much better way to get paid and not have to worry double closings or trusting me to pay him.

I have to do due diligence on the contract I guess to make sure it is legit.  My friend being involved gives me some hope because he is a good guy, but we all can get fooled.  

Are there any post transfer of llc issues that can come up? Aside from making changes on the NJ website to change LLC ownership, what else needs to be done? What if this LLC owns something that is not an asset but a liability or has tax issues?

Would my proof of transfer mean I have the same as a clear title for this LLC?

[Patti Robertson]

@Marty Happle - I'd find out why he wants to sell the LLC instead of selling the house. Avoiding a double close doesn't make sense. There's no need to do a double close if you do an assignment of the contract. The only logical explaination I can think of is that wholesaling that contract is a prohibited transaction in the terms of the contract. If this is the case, I'd suggest you speak to a local real estate attorney to have him review the situation. A lot of people push this strategy as a way around the bank and HUD restrictions. In my market the FBI has spoken at legal symposiums for our attorneys and stated that wholesaling a short sale is bank fraud. Crazy as this sounds, since the bank accepts their offer price based on their own research, 98% of FBI charges result in convictions, so anyone would be crazy to challenge them. My fear is that if the transaction ever had any reason to be investigated, the creation and sale of the LLC solely to get around a legal limitation could be construed as fraud. I think it's worth a consult with an attorney.