All Forum Posts by: Account Closed

Wow, it IS different in CA, much different. I guess I should preface my remarks with if you live in CA you want to hire a lawyer. There are lawyers that make a whole career out of evictions, they are good at what they do and reasonably priced. And, on the opposite side, there are lawyers that make a career out of defending tenants. I know in the Antelope Valley (Palmdale, Lancaster) there is a law firm that advises tenants to exercise their right to a jury trial thereby dragging it out so long as a landlord if you win you lose and if you lose you lose, unless, you settle for the $2k they want to go away, in which case you also lose . . . it's a legal shake down.

I've lived here so long I've come to accept the abuse as normal, without question. I never imagined there was a place in the US where somebody would be held responsible for there actions. Maybe there is hope:)

Anyway, Reed is from CA, he should know better than to make a blanket statement like a major disadvantage of an LLC is that you have to hire a lawyer. I like a lot of what Reed has to say but I think he is slightly off on this one. Not a big deal either way, I'm not really criticizing anybody.

Steve Might, most investors i know, including myself, have an eviction attorney represent them (or their LLC) in court. There are many attorneys that specialize in evictions, they are very good and very cheap. I wouldn't dream of doing it myself, the cost is very small compared to the time savings and the much reduced brain damage. So, when Mr Reed says not being able to represent your LLC in court is a major disadvantage, it makes me suspicious.

Jake Kucheck, you could refund EMD then file in small claims court to get it back. Not the best solution obviously but at least it gives you opportunity to follow through on the principal of the thing.

Also, what is stopping you from opening up another escrow and selling to the new buyer that way. If first buyer doesn't file LP and title will insure then you are on your way, hmmm, you may have to disclose the open escrow to new buyer. You can litigate with first buyer 'till the cows come home after closing.

I'm not a lawyer but this court case seems to pretty clearly say that a loan from one joint venture partner to the joint venture is NOT a loan, and since it is not a loan it is not subject to usury. By extension, if it is not a loan how could it be subject to lending regulations and SEC restrictions.

http://www.corporatesecuritieslawblog.com/compliance-joint-venture-exception-to-the-usury-laws.html

Paolo Dorigo, I hate to be the bearer of bad news but if the the property is in CA and more than 50% interest in an entity (including land trust) changes you must report to Board of Equalization’s (BOE) office in Sacramento within 45 days of the change. [Revenue & Taxation Code §§ 480.1 and 480.2], this started in 2010. This is done specifically to alert the tax assessor, so, you can't avoid transfer tax.

Hey, this is CA, they want every last ounce of your blood. Now that the liberals have a super majority in both the state house and senate they can pass new taxes without the voters approval and the governor can't veto (not that he would). Nothing can stop them now. Just because we have the highest income and sales tax IN THE NATION means nothing to the union controlled democrats in Sacramento .... you haven't seen anything yet!

Chris Winterhalter, does this equity agreement carry with it the nature of a loan or a partnership? If it is viewed as a partnership arrangement it would seem to avoid the lending regulations and SEC restrictions Bill Gulley speaks of.

Anybody familiar with this new CA law that starts Jan 1, 2013?

Sounds like when you sell a trust deed investment you have to make sure the buyer is “suitable”, if it is determined they are not you can be subject to some strict civil penalties. I’m thinking that if the TD investment doesn't work out as expected the investor will no doubt claim they were not suitable and try to recover losses from TD seller.

Any thoughts?

- The first has to operate within limits, they can't simply "... cut your head off ...". The first can't deny you the right to reinstate, foreclose, SS, etc. You do have rights, subject to the 1st's senior position.

- Every deed of trust/mortgage is recorded and indicates the loan amount. You can make some reasonable assumptions about amortization and interest rate to come up with an estimate of balance, this is one way, not always perfect but a good estimate, doubt I would buy a NPN 2nd on this data. When buying a NPN 2nd you should get a credit report, either from the note seller or you pull your own, this should give you the balance on the 1st if institutional.

I'm not sure NPN notes is the place for a beginner. I have a fair amount of experience with loans but am still very cautious about my knowledge level when it comes to this stuff. You WILL make mistakes and lose money. Remember how you started this thread with "... if i were to purchase, say, a 2nd position note at a steep discount ...", well, if you buy right you can STILL make money if you lose here and there.

Morris Lucas, the short answer is ...

Q: Mainly, if i were to purchase, say, a 2nd position note at a steep discount, what rights do i have if it is NP note?

A: All the rights of the original note holder. You can foreclose, modify the loan, approve a short sale, get sued because original lender messed up the origination, fail to keep insurance and lose it all if house burns down, etc. Oh, if 1st forecloses in TX, they have no legal obligation to notify the 2nd so you could be sold out and lose it all it you don't watch closely. These lose-it-all scenario's are rare, it should be said.

Q: Can i wholesale the property to an investor pending the 1st mortgage?

A: Only the owner can sell the property. If you foreclose and become the owner then, yes, you can sell subject to the 1st. Beware that a sub2 sale may give the 1st the right to accelerate. As a note holder, you can sell the note, but not the property

Q: Lease option it to an owner-occupier subject to 1st?

A: Only the owner can L/O the property. If you foreclosure and become the owner then, yes, you can L/O, but, again, beware that a L/O may give the 1st the right to accelerate.

Q: Also, would it ever be a situation where it would make any sense to purchase a 2nd lien on a vacant property where homeowner has left?

A: Yes, it’s (mostly) all about equity, if there is enough equity then it would make sense. However, this would be unusual in today’s environment.

Q: Finally, would local smaller banks and credit unions be a good place to cherry pick these kinds of notes to purchase, or do you have to do the direct mail, website marketing, drive-around deal like other strategies to find these mortgages?

A: I'm sure anything is possible, but, it's my understanding that most one-off NPN's are purchased from hedge funds that buy in bulk.

I took a look at homepath.com. The addendum seems to have the exact deed language but leaves the dollar amounts and time limits as a blank, presumably they will only accept exactly what they want in those blanks.

So, the way I read it, if, for example, a flipper bought a property with this deed restriction for all cash then the day after closing got a private loan in an amount not to exceed 120% of the purchase price, there would be no violation. Is that how you see it Wayne Brooks?