All Forum Posts by: Nat C.

Peter, I am glad you are mystified, because I am mystified too! When I first reached out to her about these issues, she said she had a baby now and didn't have time to help with any matters. I recently emailed her again with further questions, after everyone here (Peter, Wayne, Tom) gave me so much information and insight. 

My Question to her-

"Why was this extremely important issue put in the contract as a post-closing matter? Why was closing not simply delayed until the matter had been dealt with? The seller would have then learned that it couldn’t be separated and I never would have bought the property."

Her Answer-

• "I was not present at the outset of negotiations. The contract, with no contingencies, had already been entered into when I started working on the transaction. I do not know why that was included as a post-closing condition for the seller." 

1. The building is vacant and is almost a shell, requiring build-out. I did some work there but it requires substantially more work to be habitable.

2. As above, it can generate no revenue in its current state. To build it out requires permits. The city won't issue any permits at present because of its zoning conundrum. 

Regarding the legal costs, I fully concur that it's a financial risk. The costs of litigation render the justice system, most unjust. Many a time have I been wronged in real estate matters but I have decided to just let the matter go. 

Thank you for your valuable insight, Tom. You are correct, it can be deduced there is no claim to be made with the title insurance company. 

I emailed the sellers attorney with the following-

"It has recently come to my attention that the terms of the contract that the seller signed, have not been fulfilled. The contract states-“Seller, as a condition subsequent to closing, shall remove and sever the subject properties from the condominium regime.”
As of May 2020, the severance has not been executed with the city. This has rendered the property unmarketable and unsaleable.
I am writing to formally request that your client honor the terms of the contract and undertake the necessary action to fulfill the contract terms.
If the property is not able to be separated from the condominium, I will only be able to sell the building at a fraction of the price. I will then be seeking damages from your client for the difference in price."

His response was that-

1. He executed the termination with the county.

2. It was my responsibility to do due diligence with the city prior to the purchase.

I agree with his statements however I believe there is still a breach of contract as he did not and could not complete the severance with the city.

Does anyone else find it suspicious that this was not handled prior to closing? In every other real estate transaction, I can recall in my entire life, the closing is stalled until any outstanding issues are finalized. Hugely important matters relating to the zoning of the land are never left to post-closing.

When you say to sue everyone, is that one lawsuit where you name everyone who could possibly be responsible?

I have little knowledge and experience with lawsuits but I think that’s the general approach, as opposed to separate lawsuits. And would I be correct in thinking the amount I would sue for is the difference in the sale price? E.g, The buyer I had lined up will only pay 100K, now that the property has all of these problems with the city. The original contract price was 150k, so I would, therefore, sell it off at 100k and initiate a lawsuit for 50k?

Peter, your knowledge and expertise is simply amazing. If I had even half of your proficiency, I wouldn't be in this mess in the first place. 

I have checked the policy and both items you mentioned in Schedule A and B reference the property as part of the condominium. I was already doubtful I had any claim under the title insurance policy and this has just cemented that. 

It was not a run of the mill sale. I absolutely was represented by an attorney who charged me a huge fee for her services. I was already vexed by her services prior to the closing.

She failed to mention to me there was a $5000 bond I had to pay to the city as a guarantee I would remodel the property within 90 days of purchase. As I was overseas at the time of the closing and wasn't going back to the US for months, I knew there was no way I could remodel the property within that time frame. When she told me about the $5000 bond, I immediately said I needed to withdraw from the sale. She told me that it was too late to withdraw from the sale, without losing my 10k EMD. As someone who was meant to be representing me and my interests, I always strongly felt she was on the seller's side. She was referred to me by the real estate agent. The real estate agent was a whole other can of worms. I wouldn't even bother trying to pursue the realtor, as she probably doesn't have a dollar to her name.

I contacted the attorney who represented me immediately after all of these issues came to light. Her response was that it was the seller's attorney's responsibility to handle the separation post-closing, so it had nothing to do with her. I also just saw that she (my attorney) was the issuing agent of the title policy. 

Do you think I have any probable suit with her? To be honest, it would make me feel a sense of justice to go after her, considering her conduct from the start.

@Wayne Brooks 

Tom Gimer I can't tag you as we are not connected by I hope you can weigh in

I purchased a property in Dade County in 2013. The property was on the same parcel as another condominium building.

The purchase contract stated this in the additional terms-

“Seller, as a condition subsequent to closing, shall remove and sever the subject properties from the condominium regime.”

When I recently went to sell the building, the buyers attorney informed me the land was never separated from the condominium with the city. Furthermore the city will not allow the separation as it would not meet their size and setback requirements. The buyer therefor backed out of the sale.

After extensive investigation, it was discovered that the sellers attorney executed the separation of the property with the county but not with the city.

The city will not issue any permits for work on the property unless it rejoins the condominium association.

Rejoining the condominium could trigger them to ask for backpay of 7 years HOA dues. It will also reduce the value of the building as it will be tied to a HOA and have ongoing fees payable.

I am trying to decide the best course of action forward.

1. Make a claim with the title insurance company because I feel they never should have issued title insurance on the property to begin with. I am unsure if I can make a valid claim and would value any feedback here.

2. Request the seller and his attorney hire a zoning attorney to battle with the city and obtain a variance to allow the plot to be legalised.

3. Sue the seller alleging they had an intention of fraud. I would argue they were aware the city would not allow the separation due to the size and setbacks, hence they sold the property and said the severance would be done after the sale. I am not sure how much I would try to claim in damages though?

I purchased the building for 80k. Funds spent over the years adds up to 40k.

The recent contract I had to sell the building was for 150k.

@Marian Smith

Haha I love how your headline parodies the former post!

I do think it’s crazy to pay a PM up to 10% simply to be the middle man pocketing the rent and sending you the remaining 90% from a tenant who pays like clockwork.

As someone has already pointed out, if you have a C class property which is potentially going to be real management and rent chasing, then maybe then consider the need to bring in a PM for that property.

I could definitely write my own book about self-managing long-distance.

My proudest moment was when traveling on a train through a third work country, I had a tenant in Miami who notified me of a broken down washer and I had a new one delivered within hours. I simply went on Facebook marketplace and bought one off someone with good reviews who could deliver it.

The internet has revolutionised things across many industries and especially in the real estate industry. Everything we need is now at our fingertips.

I have only been in real estate for one decade but I’ve seen things change drastically with technology.

I am sure self managing will develop even further to a point where it will become the norm. There are more online platforms developing like cozy, which make it easier for investors.

Who knows, maybe I will develop my own online platform in the future with more features.

Hell yes! Like the others have mentioned, analysis paralysis is a killer. The most successful business people all have something in common; they are fearless.

Of course, you don't throw caution to the wind and jump into things blindly.

Work on your underwriting skills, study, research and know your stuff but then ACT. If you do 100 deals and 3 are failures, you still succeeded far more than the person who sat there analyzing but never acted.

Analysts and aggressors are two distinctly different archetypes. It is just my personal belief that you need to be an aggressor to highly succeed in RE. I am not suggesting you need to be aggressive in your demeanor but I think you need to be ambitious, assertive, fierce and go-getting. 

If this is not you, then partner with someone who is. You can bring the underwriting and administration skills and your partner can be the go getter. 

@Nathan Killebrew

I like your thread. I’ve got too many of them in my head. Here’s one which is so true-

1% inspiration and 99% perspiration

@Alex Chau

I had read that San Fran, whilst maintaining strict zoning laws, were rather friendly about ADUs due to the huge housing costs, high demand and lack of supply. Hence, ADUs are an excellent way of increasing supply and helping with affordability.

However, your answer can’t easily be answered here because you haven’t provided enough details about your property size, set backs, parking and so forth. The city is definitely the body you need to speak to.

I will throw in one work around if you have restrictions with your property. Tiny houses on wheels, which can be easily moved off the property, can sometimes be a solution. I’m not up to scratch with the laws in your county though.