All Forum Posts by: Andrew Sol

Wow.  Still in court 5 years later.  Ouch.  
I agree with not being penny-wise and pound-foolish.  But on certain evictions of the owner after foreclosure (with no tenants involved), I've felt it's ok to use an eviction service to handle the paperwork.  If the defendant replies to the UD, then it's probably wise to hire an attorney to carry it forward.  Here, in so cal, I've seen attorneys quote upwards of $3k for uncontested.

One of the guys I've seen handle his own UD filings, does it to expedite the process. He's faster than the attorneys staff, with paperwork and filings.

Thanks. I ended up using an eviction service to help with the eviction, although they don't employ an attorney so they can't give advice.  Cost is $599 to handle the 3 day notice, serving the unlawful detainer paperwork, and all the filings.  Seemed reasonable.  Other services were charging $900.  Do you mind my asking what an attorney would charge to handle a non-contested eviction (ie. 3-day notice through the default judgement)?

If my defendant replies to the UD, I may have to hire an atty to handle the trial.  Not sure I want to represent myself, although I understand many guys do.

The deed is recorded/perfected and the 3/90 Notice to Quit has been served.  Owner's not responding to cash for keys. The Unlawful Detainer forms on the county website are aimed at tenant evictions (with a lease).  The eviction packet the county provides includes the "UD-100 Complaint - Unlawful Detainer" form, but that form states on the bottom of the first page "Do not use this form for evictions after sale (Code Civ Proc 1161a)".  The 1161a section applies to situations where occupants hold over after the premises are sold.  I can't find any other appropriate form to use for this case.

What is the correct UD form to use against holdover prior owners?  Thanks!

The only significant expense is the potential new A/C system.  But the new deed was recorded 2 weeks ago, so well before any work can begin.  I'd hope that the AC contractor would check the woman's credit and home ownership before beginning such a big project.

Quote from @Chris Seveney:

My question is how do you know this?

A next door neighbor, who really wants the prior owner gone, has kept me updated.

Anyone with California experience and knowledge want to chime in?  I've been told by a paralegal that a lien isn't valid if the owner didn't authorize it, and there's no tenant (leasehold) relationship.

Under California foreclosure law, can a vendor place a mechanics lien on
a home for work performed for the prior owner after the foreclosure
sale and the recording (perfecting) of the deed? The new owner has not
authorized the work on house. Who is at risk for this financial outlay?

Here's the situation. The trustees deed has been recorded but the holdover prior owner hasn't vacated the house. Unlawful Detainer has been served.  The prior owner, who's a little delusional and in denial, continues to care for the house.  Had the palm fronds trimmed.  Pool guys still comes by.  Just had the carpets cleaned.  And now she's met with an A/C company to get a quote on upgrading the A/C units. All of this work is after the foreclosure sale and part is after the deed was perfected.  Can any of these vendors lien the property if she doesn't pay?  What is the risk to the new buyer?

I've read that a "tenant" can have work done and bind the owner.  But this isn't a tenant, in the sense that there isn't a lease agreement.  Thoughts?

Thanks for the feedback.  The language of the OA is pretty dense, but I've combed it and don't see any provision to require an early exit from the fund. 

@Brian Burke the sponsor needed an appraisal to complete the refi, but hasn't shared it with us. A commercial realtor gave a BPO for 20% higher than the refi amount. My gut tells me the sponsor sees that the deal did better than expected, and he feels 20% COC is adequate for the investors and he wants the remaining upside.

@Ray Johnson the sponsor owns the management company.  He's done a dozen deals over the last 10 years, but up until recently the investors have always stayed in the funds after a refi.  The waterfall gives the sponsor a 50% split of all proceeds after the preferred return & equity capital has been repaid.  There is no provision for an exit after a certain return is surpassed.  To my knowledge, he isn't closing the fund, only exiting the investors.  There is no separate entity maintaining the asset, and the project would certainly appraise for 20% more than the refi amount that he's disbursing.

I've never needed an attorney for anything related to these syndications. How would I go about finding an atty informed in these matters? Securities attys ain't cheap.  Also, I don't personally know any of the other investors, but I suspect they are not sophisticated in these matters.  What are my ethical obligations in reaching out to them with this info?  I expect most or all have relinquished their membership, as the sponsor requested.  Or should I just deal with the sponsor and not involve the others?  I suspect several of them are in other deals with the sponsor.

My Dad is currently invested in a few syndicated multifamily deals, and one of them is stabilized and ready to market. 

Instead of selling it, the sponsor has decided to "recapitalize the property with new equity and debt amount".  Basically, he's doing a cash-out refi, distributing the proceeds, and plans to "exit" the investors from the deal (calling it a recapitalization). The Operating Agreement is silent on this process and says nothing about exiting upon refinancing, only upon dissolution of the fund after the assets are liquidated.

The sponsor is keeping the remaining 20% equity (after the refi) for himself. The annualized COC return on the deal is over 20%, so no complaints there. But if it were a sale, or true recapitalization, the investment proceeds would double that.

Does the sponsor have any justification or precedent in doing this, if it's not described in the OA?  He believes he does, but gives no details.  He's asked for a signed “assignment of membership interest” form, before distributing the proceeds from the refi.  Most of the investors, I believe, are Mom and Pop types, and don't know any better than to give back their interest.

I don't want to burn bridges with the sponsor, but I'm not willing to give up the significant $ that the OA entitles me to.  Any helpful thoughts or insights?  Is it time to contact an attorney? 

Originally posted by @Brian Burke:

@Jean G., by "return OF capital" I mean exactly that...getting their investment back, which, oddly enough, can be defined in more than one way.

As to your question about whether investors retain their ownership after they have been cashed out...in my offerings they do. I have heard of other sponsors that exit their investors out via a refinance. That strategy puzzles me...why would your investors want to relinquish their ownership just as the deal turns from good to great? I say give them their money back, keep the ownership just as it was, and they'll happily re-invest the proceeds from the liquidity event in your next deal. You get two investors for one, and the investor gets two deals for one. Everyone wins. If you take them out, only the sponsor wins. How does the saying go? Bulls make money, bears make money, hogs get slaughtered...

I know this is an old thread, but the information here is valuable and not readily available elsewhere.

@Brian Burke, I have a question about your statement "I've heard of other sponsors that exit their investors out via a refinance". How would a sponsor “exit” their investors? Certainly it would need to be spelled out in the operating agreement? If a sponsor tried to "exit" the investors after a refi, without any language or procedure detailed in the OA, could it be enforced? I'm in an awkward situation where the sponsor is trying to remove the investors so only he benefits from the remaining equity after the refi cash distribution. I'm trying to understand if there's precedent or justification for this sort of thing.