All Forum Posts by: Bryan Zuetel

Your recorded memorandum will probably be an exception to the issuance of a title policy, such that the seller will probably be required to get a release in order to be issued a title policy.  You can also file a lawsuit for specific performance and potentially record a Notice of Lis Pendens or similar document dependent on your state, which will create a cloud on title.  I doubt that the specific performance lawsuit is ultimately worth it, but you may be able to recoup some of your expenses and consulting time in return for the release of the memorandum and Notice of Lis Pendens.

This is basically a matter of contract law and could involve issues of whether the agents were negligent in the performance of their duties to provide the proper form contracts for this FHA transaction. There are customary appraisal contingencies. There are FHA appraisal contingencies (based on FHA loan approval, which requires FHA appraisal at contract price). These are customary provisions in the form contracts that should have been provided to the principals by the agents. If the FHA loan amendment form was not utilized, look to the buyer agent because the buyer has been damaged by the buyer agent's lack of care in the provision of form contracts. If the FHA loan amendment form was utilized, follow the terms of that amendment for the cancellation of the contract and return of earnest money.

@Holly McDowell, I'm a real estate attorney in Orange County and can discuss your real estate needs and intentions, if desired.

I definitely agree with the two securities attorneys above.  As a real estate attorney, I only handle the real estate side (not the securities side), either as a principal in the transaction or as a California real estate attorney for California matters.

@William C., please review my initial statement: this is what I would argue in court.  I'm not licensed in your state and not offering legal advice to you or your particular situation.  The key test is whether you knew OR should have known (note this second test doesn't depend on your actual knowledge).  You can stick your head in the sand and claim that this is silly, but this is the liability that every flipper and real estate owner takes on when selling a home.  All that people in the forum can do is warn you about potential outcomes, including the potential court outcome.  Good luck!

@William C., Here's what I would argue in court: you (as the experienced, knowledgeable house flipper) knew or should have known that the HVAC unit was incorrectly sized or that the venting was incorrect or that the age of the home required a different configuration.  You negligently rehabbed the home and sold it to the unsuspecting buyer who thought that he could trust you, given your experience, knowledge, and skill.  You failed to disclose this incorrectly sized/improper HVAC system and you should be liable for replacing it with the correctly sized, proper HVAC system.  You might not like this argument or others might disagree, but this is the argument of the buyers and you never know how things will turn out in court.

@Vijay Jain, you might be able to reduce your eviction percentage by being more selective on tenants, reviewing the tenant application, report, and tenant history further, and rejecting applicants that don't meet your criteria.

@Jan H., there are some important issues raised here that you should discuss with your CPA and exchange qualified intermediary. In addition, I'm a little confused about the ownership of this LLC that you're a part of and the purpose for your contribution to that LLC. If there are members in that LLC other than you and your wife and depending on the operating agreement and structuring of the LLC, this transfer could be considered a sale of the property to the LLC, which could create other headaches for your 1031 exchange.

@Heather Harmon, the easiest way to protect all parties is to have a promissory note and recorded deed of trust.  If the parties don't want a deed of trust on title for purposes of facilitating the refinance, then the parties could potentially hold the deed of trust in hand, unless necessary to record.  Any good lender is going to ask about the source of the purchase money and some may treat it as a purchase loan.

@Ricardo P., you can generally deduct rental property taxes, interest, repairs, depreciation, and legal expenses against your rental income.  Whether you can apply rental losses (assuming more rental expenses than rental income) against your other sources of income is a complicated issue requiring the involvement of a tax professional.  There is a possibility of reducing your taxable income to near zero with rental property deductions, but only a tax professional reviewing your unique and specific situation can determine that for you.