All Forum Posts by: Eric S.

Hello BP World,

I have some notes/contracts for deed that I want to sell through assignment.  I also want to offer a partial insurance policy on the contracts.

Anyone familiar with the legalities of where/how I can advertise these, who I can advertise to, and any limitations on who I can sell to?  I am a licensed real estate broker.  

I would be selling the entire individual contract, not a partial or a pool.  

Thanks!  

@Jeremy Marek

I sell properties in Chicago to other investors with owner/seller financing, and I think these deals can really be a win/win.  I would not assume anything about the seller and would negotiate everything about the deal, including price, amount down, monthly payment, payment grace period, balloon, etc.  Keep in mind that you will not get everything you want out of the deal, but you can most likely get what is most important to you.  

Make sure you use an attorney who is versed in mortgages/seller financing/land contract/contract for deed/articles of agreement for deed.

These agreements can be mutually beneficial because there are ways to protect the interests and needs of both parties.  

Couple of thoughts here:

1. I would think that it would be easier to deal with an LLC than an individual in case of default of a land contract. In Illinois, if a buyer of a land contract defaults, I must file a forcible entry and detainer case against the buyer to regain possession of the property. My contract states that the property is being used for investment purposes only, but I'm thinking that a judge would look more harshly at an company being sued for violating the terms of the agreement in a commercial deal than an individual who may or may not have known what he was getting into. Also, I'm thinking service of process is easier against a company than an individual, because an attorney can be served as registered agent of a company where an individual likely cannot.

2.  I was told that realistically my only recourse in case of a land contract default was the property back.  You may get a judgment, but it is very difficult to collect judgments in Illinois and typically not worth the cost.  The case would be filed against the buyer 30 days after default anyway, so how much of a judgment would you get?

3.  Frank Dodd financing issues.  

Hello BP World,

I have been selling properties on land contracts to other investors who rehab them and need a little guidance on what needs to be in my contract in terms of types of coverage.  

1.  I originally thought that "additional insured" was enough to cover my interests, but apparently some insurance companies do not notify additional insured if a policy is cancelled.  Should I be named as both mortgagee and additional insured? Should I be named anything else?

2.  I want to make sure that there is liability coverage as well as fire, but I also want to make sure that there is theft/vandalism coverage.  Is that usually a separate add-on policy?

3.  I am going loan money in the form of a revolving line of credit for materials to buyers and want to make sure those materials are protected from theft/vandalism once they are installed.  What should be the proper procedure to make sure my materials are protected?

4.  In case of a claim, I want the money to go to me first and not the buyer.  What is the wording I need in the contract and with the buyer's insurance company?

5.  I want to avoid having to pay for a back-up policy of my own.  Any advice on making a claim on a buyers policy in the worst case scenario that he defaults and is no longer cooperative?

Thanks so much for any and all input.  I think this issue is above my agents head and he has so far refused to put any of this in writing and only given my vague advice over the phone.  

legal question for an illinois attorney lawyer or anyone who does seller financing:

is it legal to write a confession of judgment into a seller financing loan contract on an investor deal, essentially having the buyer waive his right to due process, and then have them pre-sign a deed in lieu of foreclosure that would be held in escrow by an attorney and recorded after the default?

i talked to an attorney about this, and she said that it is legal, but is there any case law out there that supports this action in case of a default?

i know it is one thing to write this into the contract, but another to actually carry through with it and have it stand up in case a defaulting buyer decides to sue after i took a property back.  

i know it wouldn't work for an owner occupied deal, but investors aren't protected like owner occupants are.  i'm getting ready to sell a property on a 10 year mortgage and would really appreciate any feedback on this issue.  

@George P.

Awesome!  are those kitchen kompact cabinets?  they look very similar to ones i just used in a rehab.  i really like your rehab selections.  any chance you could share your finishes/selections?

I used to provide a fridge, stove, washer, and dryer in all of my single family rental units.  I found that the washers and dryers by far took much more abuse and were always breaking down, requiring expensive repairs or replacement.  I have since moved away from that into just providing the hookups.  

Frequently washers and dryers are left behind by tenants.  I tell incoming tenants that they may use the washer and dryer, but they are not guaranteed as part of the lease.  I provide the name and number of someone who will service them at the tenants cost.  

Most recently, I dont put any appliances in the units at all.  If tenants ask for them, I include appliances as part of the negotiation, but always try to get tenants to provide their own.  Also consider that they are difficult to move, which may be a reason for a tenant to stay longer or possibly just leave them behind.  

$500 with no agreement is not worth the possibility that the tenant will sue with free legal representation.  

Give the money back and always use a holding deposit that explicitly spells out the terms of the deposit.  I would be happy to share the one that I use with you.  

Hello BP World,

I have a SFR under contract in Bellwood and am looking to branch out from the contractors I have used in the past. This is a medium rehab that I intend to flip. Property has already been inspected and I am familiar with what needs to be done. Closing is mid-October. If you are interested or know of anyone who is familiar with rehab projects in Bellwood, please let me know. Hopefully this will turn into a fruitful relationship. Thank you!