All Forum Posts by: Chad Huffer

What I think is happening is he doesn't want to provide either the disclosure nor the disclaimer statement and he is trying to somehow classify it as a commercial transaction using one of the exemptions allowed in the state code, probably number 6 trying to claim that since I plan to use it as a rental that this somehow classifies it as commercial.  I just emailed him and ask him to clarify why he would consider it commercial.

10-702. EXEMPTIONS. The following are specifically excluded from the provisions of §10-702:

1.The initial sale of single family residential real property:

A.that has never been occupied; or

B.for which a certificate of occupancy has been issued within 1 year before the seller and buyer enter into a contract of sale;

2.A transfer that is exempt from the transfer tax under §13-207 of the Tax-Property Article, except land installment contracts of sales under §13-207(a) (11) of the Tax-Property Article and options to purchase real property under §13-207(a)(12) of the Tax-Property Article;

3.A sale by a lender or an affiliate or subsidiary of a lender that acquired the real property by foreclosure or deed in lieu of foreclosure;

4.A sheriff’s sale, tax sale, or sale by foreclosure, partition, or by court appointed trustee;

5.A transfer by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

6.A transfer of single family residential real property to be converted by the buyer into use other than residential use or to be demolished; or

7.A sale of unimproved real property.

@Wayne Brooks Here is paragraph 2 with portions in bold for emphasis:

Section 10-702 also requires the owner to disclose information about latent defects in the property that the owner has actual knowledge of. The owner must provide this information even if selling the property “as is.” “Latent defects” are defined as: Material defects in real property or an improvement to real property that:

(1)A purchaser would not reasonably be expected to ascertain or observe by a careful visual inspection of the real property; and

(2)Would pose a direct threat to the health or safety of:

(i) the purchaser; or

(ii) an occupant of the real property, including a tenant or invitee of the purchaser.

Here is the relevant section from MD Annotated Code 10-702:

 The State Real Estate Commission shall develop by regulation a single standardized form that includes the residential property condition disclosure and disclaimer statements required by this subsection.

(d) The residential property DISCLAIMER statement shall:

(1) Disclose any latent defects of which the vendor has actual knowledge that a purchaser would not reasonably be expected to ascertain by a careful visual inspection and that would pose a direct threat to the health or safety of the purchaser or an occupant; and

@Wayne Brooks

I already knew it was not  a exempted or commercial transaction as related to MD Annotated Code 10-702.  I'm not sure you looked at the correct document or read the entire document.  For Maryland it is a dual purpose document a disclosure and disclaimer statement.  The first paragraph states that Section 10-702 of MD code requires the owner of certain residential real property to furnish either a Disclaimer or Disclosure statement, therefore they must complete the appropriate section of the the dual purpose form.

Even if the seller opts to go with the disclaimer statement and sell "AS IS" this does not relieve them from providing a full list of known latent defects.  The document states as much in paragraph 2.

The original question as stated was does anyone know why this attorney would be trying to say that this is a commercial transaction when we all know it is not.

No it's a SF residential Rowhome/Townhome

So, got a residential seller in Maryland who wanted to have her attorney draft a contract.... I reviewed it and made some modifications to it and emailed it back to the attorney. He responds with this:

"It is my understanding that Ms. Seller has arranged for us to meet on April 1, 2016, Friday, at 4:00 pm. As you prepare for this meeting, please keep in mind that the contemplated transaction is a commercial transaction and your LLC is a residential consumer purchaser. As such, Ms. Selelr does not intend to extend a residential disclaimer or warranty of any kind for this sale. The property is to be sold "AS IS", only."

Now I really don't care about the MD Real Estate Commission Disclosure/Disclaimer statement it was her attorney who put it there in the first place, however, they were cherry picking portions of it to make the contract one sided so I insisted that the whole form be used since accordign to MREC sellers are required to provide one.

But now my question is does anyone know what he is talking about when hey says this is a commercial transaction and my LLC is a residential consumer purchaser?

Total funds requested: $230,000

Properties are being sold by retiring landlord and  two units were renovated last year.

• Room to increase the current cash flow (currently rented below market rent)
• Solid rental history
• Several new jobs coming to the area in November
• Very low vacancy rate in the area. (I have had another unit in the same area for 15 years)

Links to analysis sheets:

Link to Property 1

Link to Property 2

@Ryan Ogilvie 

Yeah that's pretty much what I was thinking.  I would manage them myself but they're about 700 miles away.

To clarify the $100 below market rent was in fact per unit.  I keep trying to come up with a valid reason to offer a lower price but it seems like they're already listed a good price.

Considering these two triplexes as my first buy and holds.  The vacancy rate in the area is pretty low although for calculations I used 8%.

I've added links to the pdf docs of the rental analysis.  If you would like to know more info just let me know.

Relevant info:

• Purchase price used is the ask price. (Plan to try and get that down a bit)
• I Used 10% as both the repair and capex rates.
• I believe the rental rates are currently about $100 below market.
• Roof on one property 1 is 22 yrs old (although still in good condition)
• Roof on one property 2 is 22 yrs old (although still in good condition)
• Estimated cost to replace roof is about $19,000.00 per property (2826 sqft each)

Link to Property 1

Link to Property 2

Thanks for any feedback.

@Phillip Jewell  are you talking about using a VA Loan or the a first time home buyer loan.

If you're talking about using a VA Loan you can only use that for a property that will be owner occupied and you would lose eligibility after you used it the first time; however, you can regain eligibility by paying it off and requesting it again.

As for a first time home buyer program, according to what I have seen The FHA defines a first time home buyer as a person who has not owned a home for three years.

So, in the case of this program as long as the LLC owns the property I don't think that would disqualify you for the program.

( These are only my thoughts on the topic...  I strongly recommend that you confirm this prior to making a decision )

@Lamont Marable No, Once I got the contractor estimates I decided that the numbers didn't work.

The numbers that the agent was giving me were way off.