All Forum Posts by: Joseph B. Davisson

Contracts: get your own from a mentor or attorney or use the Texas Real Estate Commission (TREC) forms available online.  TREC forms are widely accepted and current with regard to Texas laws.  They can be modified with addenda to suit just about whatever you need.  An attorney can help you with this.  I recommend an addenda explaining how you are getting paid if you are wholesaling.  Transparency is the name of the game.  I have seen wholesalers who have not informed sellers about their intentions and end up spending time dealing with a seller who refuses to sell.  This time could be used  finding new deals.  Its just not worth it.

Fees: A title company or lawyer should be able to give you a list of fees they charge for particular services like escrow, doc prep or curative title work. Dont decide based on price, an office may have higher rates but provide better service and a bit of free advice along the way.  Title insurance rates are controlled by the sate and you can just google "title insurance rates in Texas" and you will get links to calculators.  Build a relationship with a mentor or a title company that works with investors.  Many of your corporate title shops do not have attorneys in the closing office and are thrown for a loop when a deal is not a cookie cutter residential transaction involving an agent for the buyer and an agent for the seller with a big bank funding the transaction.  An unprepared title company can slow down you deal and TIME kills real estate deals. People's circumstances change, other offers are made, seller's remorse sets in, doubt causes seller's to be lees cooperative.  On a side note, we've all heard lawyers call "deal killers" and while an uninformed lawyer can certainly kill a deal, TIME is generally the cause of death.  An uninformed lawyer will need to research issues and is generally not going to recommend a course of action without some assurance that he/she is giving good guidance. This is where a lawyer familiar with your practices can add value.  Reckless investors can fowl-up a deal so badly from the beginning that it takes a lawyer TIME to untie the knot the investor has created.  This is not the lawyers fault- it is the inexperience or carelessness of the investor.  #1 killer is investors who don't know their contract and don't know how to fill them in correctly or know and don't care enough to do so.

Go to an investor meeting and read the form agreements available online. Forums like this are a wealth of information.  The best way to get help is to locate a deal, then offer an experienced investor a part of the deal for teaching you how to get it closed.  

I am not a fan of the"Real Estate Gurus"  an I have read dozens of books and attended seminars.  In my experience, John T. Reed (google him) offers very good information and his books are some of the best I have ever read.  He is very realistic and is not selling a get rich quick scheme.  He also does research on "gurus" and so you can get an alternative opinion on what you are being pitched by a guru.

In the original post you mention what the propriety owner "needs" when discussing the sales price of the property. Keep in mind that the value of the property has nothing to do with what the owner needs and is based on the market. The market doesn't care about anyone's needs. If it is a true land play the MLS isn't going to do you much good, drive the area and look for builders signs in front of new construction in the neighborhood. Ask them what they would pay for your lot, or ask an agent to look on MLS for what they paid for the lot where they are building. Builders farm this area and know exactly what the dirt is worth. Have an expert review a contract before you sign. Better yet, have someone write the contract you provide it to potential buyers. The buyer is free to offer whatever they choose, but at least you set the starting point of the negotiation.

Your area is so hot right now, I am seeing many owners sell by simply posting to their  Facebook, and posting on nextdoor and zillow.  As, far as renegotiating the price, no one can give you good advice without seeing the contract and determining the contingencies.  Rather than selling to an "investor", you might consider selling directly to a builder and cutting out the middleman.  Like others have mentioned, it sounds like the current buyer is going to assign this contract and get cashed out.  The right agent or broker may be worth the fee in terms of convenience and getting the best price. 

When you do these types of transactions, be very careful.  Make sure you follow the statutory notice provisions of Section 5.016 of the Texas Property Code. I find it always best to only close 7 days after the statutory disclosures have been delivered to the Buyer. The key to doing them successfully is total transparency and full disclosure between the buyer and seller, as well as free access to information relating to the prior lien (to monitor payments).  Buyer and Seller are somewhat entering into a partnership that will continue until the prior lien is paid off.  A desperate seller and a greedy buyer are poor candidates for these types of transactions.  Verify all information provided by the seller. 

Also, don't forget about documenting the transfer of escrow accounts for taxes and insurance, if any.  Deals can be further complicated when the seller has an unpaid insurance claim and is selling because they cant pay the deductible. I've seen this more than once in the spring after Texas hail storms and tornadoes.

I do subject-to and Wraparound deals in Dallas, Texas and my title company will close the transaction and issue title excepting to the prior lien, but I require all parties to appear in person in my office to execute the contract.  

I am interested in hearing about the steps to avoid violations for contributing "sweat equity" by brokers and lawyers who are investing their IRA or 401k money . For example, I am a lawyer and broker and a fee attorney for a title company. I don't charge my 401k for legal services nor do I pay my self commissions or close through the title company for which my firm drafts documents.

Please share your experience or advice for avoiding any violations.

Texas title attorney here.  Call an attorney and make sure you do this correctly.  Probably best to use an attorney at the title company where you intend to close when you sell.  A fee office may be more willing to do this work than a corporate operated title company.  They will instruct you as to the means of conveying title that will be insurable according to their underwriters.  Keep in mind that you are not really dealing with a "legal" matter as much as you are dealing with an "insurable title" matter.  Quit claims are legal- just not insurable in most instances (there are exceptions of course) I work on a lot of matters involving dead people who attempted to deed property before their demise and failed.  The result is expensive and time consuming.  

1.  Does great Grandma have capacity?  if yes, simply have her sign a warranty deed deeding the property to you.  Previously executing and filing of the quit claim will likely be irrelevant in the eyes of the title company underwriters and examiners. Have her sign it in the presence of a notary and record it- use a reputable attorney who is a notary if possible.  If you run into a problem later and the notary needs to be tracked down, you don't want to be chasing some random bank employee.  (if there is an outstanding Note secured by a Deed of Trust on the property then you have a few other issues to deal with.)

2. If she does not have capacity, find out who has power of attorney (make sure the POA survives her incapacity) for her and have them sign the Warranty Deed as her attorney in fact. You will need to record the original POA and the Warranty Deed. Another option mentioned above is to have a guardian appointed. This will take awhile and cost some money. Being that she already attempted to deed you the property, her intent is apparent and the guardian should (my opinion) follow suit and deed you the property. Some title companies may require a secondary writing provided by the parties to the transaction explaining the circumstances leading to the use of the POA and the failure of the actual owner to execute the deed.

3.  If she dies without a will and you have not established title to the property at the time of her death -and I am not recommending this because of the time and expense involved- but recording affidavits of heirship and a deed with all intestate heirs identified in the affidavits executing as grantors conveying title to you might do the trick.  Since she is your Great Grandmother it seems safe to assume that she has many heirs (children, grand children, great grandchildren....)  Affidavits of heirship may establish who her intestate (dying without a will) heirs are and ALL of those heirs would sign a deed conveying their interest to you - if they all cooperate and agree you should own the house.  Also, as people age the pool of candidates who are appropriate to serve as affiants get s smaller because the affiants need to give a sworn statement as to the property owner's maritial history and children and many of your great grand mother's friends may have already passed away.

I am a real estate lawyer and investor and I used Mark Nolan. Pleased with his service.

It is worth while to spend a bit of money and get advice from your legal counsel.  No one can give you reliable advice until they read the lease and learn more about the situation.  It may be that the tenant is "bluffing" like Chance suggests.  

Bill is right on.  I'd like to add that if you are concerned about getting sued in Ohio and you have a legitimate claim against the tenant, then go ahead and sue them first and file the suit in Texas.  More than likely it is not worth anyone suing unless the amounts are significant.  More often than not the right path is the path of least resistance (for the investor).  Suits are rarely worth the money an time.  You can make the money back on a new deal.  If you do reach some sort of settlement, make sure you get the tenant to sign a release absolving you from any further liability.

Greg H. has the right idea. Have an adult you trust work with an attorney to set up a revocable trust of which you are the beneficiary. There is likely an attorney with a general practice in Keller that can do this for you. Ask about a trustee opening a bank account for the trust, and entering into contracts on behalf of the trust for purchasing/selling/leasing etc. Keep in mind that a mobile home that is not permanently attached to the ground with the axles removed has a title like a car rather than a deed like real property - it is not real estate until it is "permanently" attached to the ground and the title is surrendered. The trustee will control trust assets but is obligated to act in the best interest of the beneficiary. Once you reach 18, such a trust can be revoked and trust assets distributed to you as beneficiary and you can take control of the properties and put them in a proper entity (LLC) which you control.

As a minor you can enter into contracts, but those contracts are voidable by you (not necessarily void).  If you do sign contracts, you need to let others know you are a minor.  Generally, contracts you sign as a minor will no longer be voidable once you turn 18, if they are still in effect and you do not take action to void them.

Check out this site for some information on mobile home investing.  there is some good and bad information here but a wealth of shared experience in his materials.

http://www.lonniescruggs.net/

Try to avoid using adult co-signer's if you can.  It is best if the adult you are trusting is fiduciary -having a legal obligation to protect you that you can enforce if necessary.  On smaller deal like the one you mention, there may not be enough money involved to justify a suit if you get cheated.  That is a business/financial decision you will need to make.