The contract

[Patrick Reagan]

As I learn more about wholesaling,what I would be more comfortable with is a contract where I can tell the seller straight up that I would like a certain amount of time to sell the property for a fee.If I cannot sell the property in that time frame, the contract becomes void.To go along with this agreement,I would need the agreement between myself and the buyer for my wholesale fee.Is there such a contract available?If not,any suggestions?Thank you.

[Bill Gulley]

Patrick, welcome to BP!

Why not use an addendum to a standard contract? Some may use a disclosure that describes the contract. I've used standard contracts unless I was doing something besides a straight sale and just made it clear as to what we were doing. Also, having the buyers in the wing made selling times pretty quick. Good luck :)

[Patrick Reagan]

Thanks,Bill.

Sounds like a solid idea.Do you see any issue with attorney review? The reason I ask is that I've had three attorneys tell me they don't deal with assignment contracts because most of the time a buyer can't be found and it ends up being a waste of time.Thoughts?

[Belinda D.]

Patrick Reagan, you need to find an investor friendly lawyer. If there are any REI (Real Estate Investor) meet up groups in your area, attend it and ask for lawyer referrals.

All the best to you.

[Bill Gulley]

All lawyers are investor friendly! Seems investors use "investor friendly" more to finding someone who allows them to do unconventonal or unorthodux activities that go against the grain of acceptable practice, in other words, find someone who will go along with you doing things that may have legal issues. Kind of funny as no attorney is going to hang themselves out for any investor, if you screw up you can pay them more to get you out of trouble. They may need to save face allowing you to do something, but it won't be them paying a fine or doing the time. There should be no problem with assigning a contract.

The attorney probably has the same issues with it that I do, wasting everyone's time, keeping a property off the market while someone jerks a seller around with promises of buying it or selling it. When you sign that contract you take on responsibilities an liabilities to act. While you may assign your contract, you are still responsible to that seller under the agreement.

I sggested in another thread of getting buyers in line first, then find what they want, then assign the deal that works.

IMO, no investor should hit the street to do business without havig thier contracts reviewed as to form and content by a local attorney. All real estate is local and all transactions will be viewed under the eye of local custom. :)

[Belinda D.]

Bill Gulley, Your assumption that "investor friendly" lawyers = lawyers who do "unconventional or unorthodox activities that go against the grain of acceptable practice" is very surprising!

I am sure that the majority of BPers have the best of the best local lawyers and these layers are "investor friendly".

[Jamaal Hunt]

Belinda Duhaney Thing is he is on to something. Most Real Estate lawyers knows how it works. Most of the good lawyers want all parties to know the deal even when it is a double close. Shoot most informative cash buyers know that it could be a wholesale.

[Belinda D.]

Jamaal Hunt, I hear you. I just do not agree that an "investor friendly" lawyer = illegal/unethical/unconventional activities

[Michael Dorovich]

Originally posted by Belinda Duhaney:

Bill Gulley, Your assumption that "investor friendly" lawyers = lawyers who do "unconventional or unorthodox activities that go against the grain of acceptable practice" is very surprising!

I am sure that the majority of BPers have the best of the best local lawyers and these layers are "investor friendly".

I would agree that there is a difference between an investor friendly lawyer and a conventional lawyer. I have spoken to conventional lawyers who say that assignment of contract is illegal because it is a 'securities violation', i.e. they have never seen it done. Some attorneys don't know what a subject to deal is, or how to structure an owner financing deal.

Every investor I have spoken with has stressed the importance of using an investor friendly attorney, preferably one who has invested in real estate himself or herself.

[Belinda D.]

Michael Dorovich, thank you for the clarification!

I guess then a conventional lawyer does not understand because, they don't know what they don't know or they choose not to know.

[Michael Dorovich]

Originally posted by Belinda Duhaney:

Michael Dorovich, thank you for the clarification!

I guess then a conventional lawyer does not understand because, they don't know what they don't know or they choose not to know.

No problem. Yes, the people who best understand a business are those who are involved in it directly.

[Bill Gulley]

Not sure what you meant Belinda, a good attorney is a good attorney. Thier first duty should be to keep a client out of trouble.

To say the majority of BPers, well, not sure, I'm sure many do, I know many say they will see an attorney too. I am also aware that many seem to be pinchng pennies and frankly I doubt they see an attorney in fear of having a legal bill.

I know many state they got a contract from some website or guru. We have had many posts here about contracts, pretty much the same question hundreds of times....where do I find a contract for.....

Look in the resources section of BP, I think there are contracts there. But my advice again is always the same as above.

I know too that we have "mentors" or "gurus", folks who specialize in some area who provide contracts to thier "partners" "mentees" or "students" as part of the deal they buy into. I'd just bet they will be told everthing is legal and good to go, I'd never take anyone's word for that unless they were a local attorney where that contract was intended to be used.

My comment as to justifying what someone wants to do, people get guruized, sold or taken in by some system as the way to invest. Not to pick on any one system or strategy, but take wholesailing, in some areas it's fine, in others it is seen as dealing without a license if some guru methods are used. Birddogging is another. You also hear the advocates of those strategies saying you need to find an investor friendly attorney. That mentor type can't sell his progran if he were to say, go ask your attoney if this is acceptable in your area, so they may just say it's all good, you need to finf the right attorney who knows investing!

When was the last time you bought a car from someone who told you that this car can kill you? Well, under the right circumstances or condition....or location, any car can kill you! Well, in some circumstances, conditions or locations, the wrong contract can kill your deal or your business. No contract meets all the requirements everywhere.

Get a state approved contract from a Realtor in your area and start there, build on that.

Contracts are the foundation of the RE business for an investor, can't be in business without one. How many contracts can you get out of one visit with your attorney? Hundreds, maybe a thousand? That's pretty cheap insurance.... :)

[Belinda D.]

Bill Gulley, your points are well taken. Thanks!

[Patrick Reagan]

Okay,so for example,under additional terms or conditions,I could write," The buyer of this contract intends to assign his rights to buy the property and the terms of this contract will go into effect, and attorney review will commence, once the assignment has been executed.If the assignment is not executed in 15 days from today,this purchase and sale agreement will become void."

[Bill Gulley]

Originally posted by Patrick Reagan:

Okay,so for example,under additional terms or conditions,I could write," The buyer of this contract intends to assign his rights to buy the property and the terms of this contract will go into effect, and attorney review will commence, once the assignment has been executed.If the assignment is not executed in 15 days from today,this purchase and sale agreement will become void."

You don't mean the buyer of this contract, you mean the buyer named in this contract. That means the buyer you assign the contract to has intentions of assigning, he is the "buyer of this contract". A contract is effevtive when it is executed, the effectiveness has nothing to do with the assignment. If an attorney is sitting there, they may commence, if the attorney is not present, the contract will be reviewed by legal counsel at a later time, but this is not really something to require in a contract unless you agree that the contract will become voidable within a time period arising from the findings of such review. None of that is necessary unless that is what you intend, to have an attorney approve the agreement and I'd suggest you not do that as it becomes conditional on future approval. Making a referrence to the contract date as "today" is not really clear when being read as the first thought is that today is the day it's being read, a date and time should be used to terminate the contract if it has not been assighed. A void contract is not a contract and a contract does not become void it becomes viodable in the future for the parties to avoid the agreements. Two different meanings.

I suggest you see an attorney to provide a contract with blanks for dates and that you not write anything at all, just fill in the blanks. :)

[Kevin Barrett]

The first thing that came to mind when I read your original post is why not use a Option to Purchase Contract? This type of contract can be a simple one page doc that has all the stipulations you need to protect yourself. You can try to get the seller to agree to a thirty day window for you to find an end buyer and only have as little as $10 of skin in the game.

[Bill Gulley]

Yes Kevin, an option would be more appropriate, a different approach but probably fits what is trying to be accomplished. :)

[Robert Joiner]

What a very intense thread...Good Stuff

[Patrick Reagan]

If I used the option contract,then I would use the assignment contract as it would normally be used?

[Bill Gulley]

Investors and gurus come up with all kinds of junk thinking they are limiting thier liability in dealing with outers, so sounds like an assignment "agreement" is another invention.

To assign any contract that contract simply has an assignment clause at the end, after the original signatures, stating the all rights, title and interests in and to the contract held by the buyer are assigned and set over unto whoever. Then the buyer in the contract executes the assignment, signs it, as an endorsement, that's it. Then the assignee has the rights to proceed under that contract.

Get a good option agreement, have an attorney look it over, have the attorney put an assignment clause on that option. You don't need to go into all the wacky disclsoures to sellers as the option shows the assignment, it's obvious it can be assigned, it shoudl be assumed it will be if it's there on the contract. You would also tell the seller of your intentions. You don't need to say you're in the RE business or that you intend to sell the option or that you won't live in it or that you will paint the house black after you buy it (LOL). Kinda silly too if a business is the buyer, an idiot would know that Harry Potter, LLC is not going to live there or buy it as a hobby as a business is conducting business! :)

[Kevin Barrett]

Thanks Bill Gulley. Forgot to mention the second piece...the Assignment Contract with the end buyer. Thanks for clarifying!