All Forum Posts by: John Spurlock

@Josh Stevens

The federal moratorium (among other things):

applies to tenants who have lost work during the pandemic and have no other good housing options; allows evictions for reasons other than nonpayment of rent; and imposes criminal penalties on landlords that violate the ban.

I don’t see how the length of the lease term makes any difference in this situation. Many states imply a month to month lease after the lease term expires, but the moratorium applies regardless.

-John

@Caroline Gerardo

That’s right. Loans are assigned more often than not, so it might be more difficult to track down the holder to get authorization. Another option is to just refinance if the time is right anyway.

@Matt Jennissen

Yes, I have. The process really isn’t too bad or you can wait to transfer at the time you refinance.

I have actually represented a real estate investor that called me because his lender started the foreclosure process after he transferred a few properties in LLCs. It worked out in the end, but the bank wanted my client to reimburse their attorney fees.

@Matt Jennissen

If you want to transfer mortgaged property to an LLC, just get prior authorization from the bank. It's a routine process that many banks have forms for on their website. In addition, some banks require a reaffirmation agreement.

Bottom line, don’t risk it, just call your banker or lawyer.

-John

@Greg Scott

I disagree with your attorney. The eviction moratorium doesn’t stop a landlord from suing for breach of contract and it doesn’t provide a tenant a defense for failure to pay the monthly rent, it only stops evictions.

As far as the constitution is concerned, I think that the eviction moratorium could possibly give rise to a regulatory taking claim under the Fifth Amendment. At the end of the day it’s still easier to sue for rent and try challenging the CDC affidavit.

This isn’t legal advice, just my thoughts on this novel issue.

-John

@Sam Johnson feel free to message me and we can set up a meeting.

John

@Doug Trumbull Most banks take this issue on a case-by-case basis. They have the leverage here because without their written consent, you can trigger the due on sale clause.

First of all, this is great post. Your mentor's strategy is probably tempered with real life experiences that give him a roadmap for the future. At his level (and probably age) there's no reason to expose all of his wealth to market uncertainty.

In terms of preservation, I try to build a motte around my investments to protect them from the market and potential liability exposure. 

I hold my properties longer than most of other investors that I know, this helps insulate my properties from market fluctuation. As you know, you make your profit upon purchase. I try to have my lease agreements shift most of the responsibilities from my companies to the tenants, make sure my LLCs are sound and that my commercial insurance policies cover the "unexpected" events that could go wrong. 

That being said, every plan has a weak point. You need to be flexible enough to adapt to the situation to overcome it. I like having a couple contingency plans in place. My favorite contingency is you can never have enough cash on hand. 

-John

1. No you do not need to register your Maryland LLC in Virginia, unless you plan on doing business in Virginia.

2. I recommend hiring a registered agent in Maryland since you no longer live there. In addition, this will take your name and contact information off the public record. 

Do you have written lease agreements with your tenants? If so, do you have the LLC listed as the landord on your leases?

-John

This didn't happen to me, but it is still the most significant mistake I have witnessed in real estate. Clients attempted to daft their own "contract for deed" with a seller to purchase an apartment complex. It was a literal train wreck. First, the seller refinanced the property after the "closing date" since he was still listed as the record title holder. Then, the seller continued to act as though he was the real owner of the property. He threatened tenants and even demanded that they pay him rent instead of the buyers. Even worse, he re-listed the property.