All Forum Posts by: Bryan Barry

Before going out and getting my first deal underway I want to know as much as possible and I have bee hearing a lot of "fraud in the inducement" and I was wondering if there was any ways or certain weasel clauses I could put in a contract to protect myself from legal issues. Keep in mind that I plan on assigning contracts for a fee (in case you were wondering).

 What would happen if I bring it to the sellers attention (or this would be stated in the contract) that I may wholesale/assign the contract to someone else for a profit/fee? Would that help my case if I were to be sued for fraud by inducement? 

 How would this be unlicensed brokering? I am getting a property under contract, and then selling that contract for a fee. I am not receiving a commission. 

 The financing clauses (in my contract) state that it gives me, the "buyer" (and/or assigns) until the date of closing to find financing for the property (whether it be 15 days, 30 days, or however long from the time both parties have signed to the date of closing. I would adjust depending on how much the seller wants to sell their property, and if they want to sell quickly). It also states that if financing falls through, inspection of the house reveals structural damage, or for any reason that I the buyer would not want to buy the house in a specified time window (usually five days before closing, again this is adjustable) that I am free of any obligation and have the right not to purchase the house. This clause is in place in the event I can not find a buyer to assign the contract to. There is also a separate clause that states the seller is aware that I am trying to make a profit.

Obviously I would still have to go to the title company to file the paperwork, but could the investor go down and file it himself if he wanted to? This is in the scenario where we both have our respective copies of the contract just in case.

 I've never heard of an upfront assignment fee. Does that basically mean I meet with the buyer, he gives me my fee on the spot, signs the assignment of contract, and then my business is done? I don't have to show up at closing or collect a check from the title company? 

So, lets say I have a standard wholesale deal set up. I have a seller and an investor. I get the property under contract as per usual, with a financing clause that holds me (the "buyer") free of obligation if I don't find another buyer to assign it to. Lets say I do find an investor and we agree on an assignment fee of 10,000 dollars. I file the property agreement and the assignment of contract to the title company, therefore the investor takes on all responsibilities of the "buyer" in the property agreement (including the financing clause stated earlier). What happens after everything is filed, but the investor (for any reason) doesn't purchase the house? Does this essentially mean a month's work was all for nothing? I know this would seldom happen, but I couldn't help but wonder. I'm also going to make an educated guess that I wouldn't be getting that 10,000 dollars.

In this case I am mostly dealing in real estate that is for sale by owner who is fine with getting paid in cash, I have heard from a few people (some in my own state/area) that it is not required to have a real estate license to assign contracts to cash buyers.