All Forum Posts by: Steve McGovern

15??  Congratulations!  How did the idea of Real Estate Investing ever occur to you?  

at 15, I was thinking about part time work.  Go find a decent property management company and get a PT job with them.  You'll clean some garbage and you'll do a ton of grunt work.  It'll be hard work and not always fun.  HOWEVER when you look back about a year later, you'll realize that you've already learned a TON about buildings, systems, building codes, markets, finance, rental laws and above all, the importance of relationships.  Build your later work on all the experiences of this place.  

Always be respectful, keep your head up and your ears open.  Volunteer for EVERYTHING and you'll do well.  

Richard C. made a very good point-- you then need to ACT in accord to preserve any insulation from liability, and most people simply do not.  

I've seen this-- and Nick Britton is pretty much spot-on.  Kindly note-- I'm NOT an Attorney, and I'm certainly not speaking solely to info in your juris, but I've worked in national real estate for many years, and I can maybe give you a couple of ideas to think about.  

When you purchase property in an LLC, the Lender has had the opportunity to vet the LLC as a "credit-worthy entity" for its own sake. When you puchase property in your own name, and then TRANSFER to an LLC, you're then removing that ability from the lender. All they know is that some corporate shell with no history is now taking management control of "their" assets/collateral. Partial releases, long term land leases, even transfers into trust can all technically trigger the due on sale clause. In addition, some loans allow for internal/corporate merger transfers and some do not-- at least on their faces.

What are the EXACT REASONS that you're transferring to an LLC, and how were your articles drafted? For example, you may have wished to solely protect yourself from the tenant-side liability, and your attorney, acting in your best interest, drafted the articles to protect you from "everything." I'm not suggesting this will help. but I would work with your attorney to draft a partnership-oriented LLC. Show the Lender that the financial obligation to pay (Tax burden, etc.) still passes through to the Members/Managers, that those Members/Managers were the original Mortgagors, and then they may view the transfer as a housekeeping item, instead of a threat. Don't be surprised if they demand to review your corporate docs once a year to assure that you don't then transfer into the more-liberating structure.

Finally-- here's a possible other maneuver that may help: consider creating the LLC as your management shell. You can lease the properties to the LLC, who then is solely responsible for subleasing to your tenants. Again, this may not absolve "you" of liability, but it will put the shell in between yourself & the assets. Again, depending on how your docs are drafted and the laws/regs in your jurisdiction, this may still trigger the DOS clause, but at least there's not an actual assignment for them to approve.

Definitely do speak to an Atty. who's used to working with leasing matters, corporate transfers, other assignments of interest, Commercial Mortgages, Assignments of Leases and Rents, etc.  The traditional residential conveyancer may simply not have the experience, clout, or relationships to pull this off.  

Good luck.  

Interesting predicament.  I've been involved with something similar, where the building being constructed was inadvertently expanded into the setback, and similar types of relief were required from the neighboring party.  

Nope-- no laws (Well, none that I've ever heard of-- in any jurisdiction.) It's their property, they can put the structure anywhere they want within the current Zoning Ordinance... and "interior" setbacks (e.g., those that would theoretically be up the middle 'property line' that now runs through the house) are generally dissolved due to the fact that they're not relevant. (Again, I'll say in MOST Jurisdictions... just to put the disclaimer cherry on the cake one last time.  Every area is different as we all know. )  

My first bit of advice is to visit the County/Town.  Speak to the Building Inspector-- or better if you're in a larger town, the Zoning Administrator.  Come clean.  Make it sound like you were duped...   because in at least one sense, you were.  The first thing you need to know is what you can & can't do to the property "as it currently sits."  E.g., if you re-build a porch, and that new porch is one inch larger-- do you trigger setback issues?  What do the local regs say about legal non-conforming use (because in my opinion that's the scenario that you've purchased yourself into.)  Can you even re-blacktop the driveway? What can you do and not do? Forget a Zoning & Planning action for a moment-- can you even get a Building Permit?  

After you figure out all of those things, now let's look at the property line, in concert with your intentions for the property-- DO you intend to add anything onto the footprint? Think about porches, decks, patios, drives, walks, pools, and sheds; answer the same questions about these.    Does the driveway encroach on the now-neighboring land?  Any fenceline added?  Figure out what you intend to do, and ask your Town/county contact how much land-- and where on the property-- you would need to acquire in order to proceed with your plans.  Then ask this question:  If you receive a Perpetual Easement for that land from the Owner, instead of owning it outright, does that give you any form of Zoning relief or do the actual boundaries still rule?  (In 99 out of 100 cases, the boundaries will rule, but it's still worth the question.)

Here's another issue:  Does any of the now-neighboring land affect your access to the premises?  I'm not saying this is your case, nor that your seller is this diabolical, but often you'd hear cases of exactly this happening and it's the (let's say "Front") of the Land that's retained by the Seller... the new property line goes right across the driveway, no "easement" is mentioned in the Deed,  and now your access is cut off. Now you have to pay another fee, to own, use, lease, license, permit, grant, or manage/maintain-- your OWN Drive to your OWN house.    Many states, however, have statutes that prevent land locked parcels-- in these states an Owner has a RIGHT to access his property-- the abutters must offer a reasonable access. in your situation, I'd argue that it's also the case that the parcel must be SOLD with same rights in a state like this.    If this is your situation in any way, then figure that out and memorialize it with the neighbors; don't be surprised if you need to get the Courts involved for this, but it would be your right in those areas.  

Finally-- no actually FIRST. First, seek legal counsel. If there's some way to compel the Seller to give you what you need to make you whole, whether it's access-- or an Easement-- or a boundary line adjustment around structure-- or a boundary line adjustment around structure PLUS setback-- and/or all of the aforementioned plus enough land to make it a legal lot on its own (e.g., if the acreage is shy from the zoning requirement in the neighborhood,) then a good lawyer will know it. Please, don't just go to "Bob the Conveyancer" for this-- find someone who does subdivision regs, development, HOA and/or land use for at least 50% of his or her business, and they'll likely be able to tell you your next steps in that juris immediately.

Whatever solution you ultimately wind up with, pay the money, get it surveyed, and get that survey recorded in the official records.

Hope that helps.  

Lenzy, I, personally, think you're right on, and here's why: 

1) wholesaling is an art- and your USUAL buyers are investors in 9 out of 10 cases, BUT there is that occasional 'regular owner-occupier-rehab it as I go' type of owner that you can run into. 

2)  that rehab-as-i-go gal I mentioned, above...   think about her anxiety-laden husband...  --OR-- That  rehab-it-as-i-go guy I mentioned above...  think about his owner-occupier-move-in-ready wife for a moment.   

You have addressed the needs of that 'other' party in the transaction.... or the next "other party" after the investor.    

3) FUSES?!?!  They may operate absolutely perfectly and have a real-time lifespan of another 40 years...  but this isn't an argument of "the walls are too green" or "There's condensation between the panes?" or  "I'd really prefer quartz countertops to formica" we're talking about here.  This is something that someone is necessarily going to want to update.  It doesn't matter much if it legally NEEDS to be brought up to code, any Home Inspector worth the paper pulp in his certificate WILL call that out as a potential issue, and the new Owner's Insurance company will likely call attention to it, too.  With aging fuse boxes necessarily comes the questions of aging metal-armored cable, with-which comes the questions of a faulty ground contact in that cable.  Yes, I'm assuming a little here, but you said it yourself:  "Ancient."   It needs improvement.  

Assume that a property like this needs the work, and go from there.  You can always offer more, or maybe, if you have your license, you can even work on a tiered percentage as opposed to a flat fee.  Offer options.  

Hi Tom--   I'll give you my question (conclusion) first:  

--Do you have a website?-- 

Of course, for many of us, it goes without saying.  However, I'm astounded to still discover that although most of the business owners that I know have bona fide, real, not canned websites and others either have none or a cursory attempt to check a box on the checklist-type of website.  This is especially true for new businesses... and (kindly pardon the generalization, but my experience says... ) those run by retirees and similar types of owners. 

I'll assume you have a website, and then my answer is "yes, of course I'd trust you with my properties!"  This is because you've used your website as the marketing medium to show me just how much experience and expertise you do have, and I can see that it's easy to WANT to entrust my properties to you. 

For those of you who don't...  see above.  

Slainte!

Steve

Welcome, Kathy!! 

Thanks Josh!  I actually Google Image searched the caricature he's using for a photo somewhere and came up with a pastor of a church in TX (I think it was Texas...).   Nowhere near Las Vegas.  Subsequent search CLEARLY shows that this caricature is absolutely the Pastor when compared to the Pastor's widely available photos.   I'm steering clear and would advise others to as well.  

Why have you identified yourself as an associate?  Are you seeking places for your money? Feel free to PM me.  

@Jay Hinrichs

Agreed, nuances can be VERY state specific...  because I've done closings for cell tower companies, I've had the opportunity to work title on a national basis;  some of my legal work for the larger firms was nationally-oriented, too.  You never know what weird quirks & oddities are out there-- just like the one you mentioned in MO. Always better to hire local counsel than to guess what weird lurking thing may bite you around the corner that you never would have considered.   

Quick guide to Deeds in colloquial language-- NOT state specific:  

Warranty Deed:  "You own it all, baby!  ...well, except for these things over here that we all already know about.  Sure, I'll even warranty it."  

Quitclaim Deed**: "Look, whatever it is that I have, you own now,  unless I conveyed it out myself. Could be everything, or nothing at all, Have a nice day. Don't bother me again."  

Special Warranty Deed (Lies in between the above two):  "Listen,  I'll warranty it, but I'm only gonna warranty it for the things that happened to it while I owned it."  

Foreclosure/Trustee's Deed:  "Well, we were the lender... and we had to take the property back from the owner,  so yeah, we possess it...  but we only possess what we took for collateral, so it doesn't matter what he owned, what matters is what the legal description for the mortgage/deed of trust says...   cause that's all we have the right to."  

You're in NY, so here's a bonus -- Bargain & Sale Deed:  "Yup,  you own it.  Congrats.  Have a nice life, 'cause I'm outta here."  

** In most of Massachusetts, for example, a Quitclaim IS, in fact, the only Deed. You'll also never get more than this or a Special Warranty Deed  from a governmental/quazi governmental agency, so the Quitclaim isn't quite as bad as it seems, in most places.  

On the other hand, I've also seen Quitclaims used to describe leasehold interests that were being conveyed and not the Fee, at all.   This is rare, but I've seen it more than once, in my work. If You're getting a Quitclaim from a real company or individual AND that isn't the normal deed that's passed from party to party in the jurisdiction, then I would highly advise searching past that Deed for the basis of your title search. Go one or two owners back from that point, to assure that you understand what you actually own.