All Forum Posts by: Robert Gilstrap

@Account Closed  The bankruptcy should not affect you or the person you sold it to at all as long as payments are being made. The person who filed had a BK attorney who told him/her to list every debt they had and that includes the mortgage on the property he sold you sub-to. Doesn't matter as long as you keep making payments. He can either affirm the debt or not in his bankruptcy. Guessing his BK attorney said they are NOT affirming the debt meaning they are not going to make payments and they are seeking to have the BK court discharge that debt. The issue is however, if payments are still being made then the effect is the BK court discharges the debt from the debtors BK estate but the house can't get foreclosed on because payments are current. 

If you are saying they are refusing to accept your payment at the bank then you are just dealing with someone who sees the flag on their system that says "bankruptcy" and they are unsure what to do. Make the payment in person if you can and if you have to contact the bankruptcy trustee for the case and tender payment to them (only do so through a BK attorney you hire to represent you). You should also contact the debtors BK attorney and explain that you are seeking to pay on the debt.

I agree that you need to act quickly and if you can't get someone to accept payment then you need to hire a BK attorney to assist you in forcing them to accept your payment (and they will take it). Had this exact situation several times on sub-to's I own. I pray you owned this in an entity/trust and you sold it that way as well because if the sky falls you don't want to be exposed to a potential suit from the guy you sold it to. 

@Daniel Rutherford  No clue why anyone would ever suggest throwing away money by paying for two insurance policies nor would having the owner listed as "additional insured" do anything since a mortgage company requires the borrowers name to be a "named insured" on the insurance. Not to mention "additional insureds" can't collect a check when there is a loss, they only get liability protection (legal defense) in the event of a liability claim.

This is an easy fix: You get your insurance broker to issue a policy in your title holding entities name as a named insured and then list the old owners name (the person on the mortgage) as a co-named insured with the acronym "ATIMA" out beside it. ATIMA means "As Their Interests May Appear" and is a common practice. If your insurance person doesn't know what that means then you need to find a more experienced insurance person!  Now the insurance company will cover both co-named insured parties "as their interests may appear" in the event of a loss. What does this mean? Well think about what happens when you have a loss: you file a claim and provide the insurance underwriter all the details of the loss. The underwriter will, as part of their job, seek to determine who has an insurable interest in the property since they are not obligated to pay anyone who has no insurable interest. You can explain how you purchased it subject-to and show that you alone hold sole title to the property and therefore you hold the only insurable interest and best case scenario they cut the check to you alone and you move on down the road. Since many insurance companies don't want to risk any type of future lawsuit no matter how remote the possibility, when they see the borrowers name is on the mortgage and your name is on the deed they may just issue the check to both parties. Again, there is no problem there either since presumably you have obtained a power of attorney from the seller at closing which entitles you to sign any insurance proceeds checks. (happy to provide mine as a template if you need a place to start).

OK so lets get back to addressing the day to day management of a subject-to deal when dealing with the mortgage company:

Now when the mortgage company gets the proof of insurance form from the insurance company the person doing the data entry immediately sees the borrowers name on the policy under the correct "named insured" box and they move happily on since you have satisfied what they expected to see. I typically get the mortgage holders name listed above mine so it's the very first name the mortgage company sees and thus even less chance of a problem.

@Alex Stoll   No matter who you choose make sure they are NARPM credentialed. It's not a guarantee of success but it's a major step in the right direction. Kandy Meehan handles that are and is a top notch PM. Google Home Rental Services Inc. Home4rent.com is their website.

@Amina Sanders@Frankie White **Disclaimer, I'm totally biased here **  but...it's almost laughable to me when I see posts that encourage self management over professional management. I get the rationality somewhat but I typically only see that when the person doesn't value their time or recognize their limitations. It's literally like a kid playing T-ball being compared to a major league player. Most owners who self manage "don't know what they don't know" and that is where the value of a professional comes in. A good manager will make or save you far more money than you ever pay them for their services.

Think about why you pay any professional; take landscaping for example. Anybody can cut their own grass right?  But what you can't do is cut it as fast or as good as a pro. Nor do you know the specifics about chemicals used to treat it, you likely don't have the mega expensive professional mower and other equipment they have, you don't have a crew of guys who can get it done in 30 minutes, etc.  Plus, you have to factor in the value of your time. What could you have been doing in income generating activity while you were fiddling around trying to learn the ropes of this other job? It took me years to figure out that the highest and most profitable use of my time was in making offers and doing deals not swinging hammers or dealing with tenants. I own a management company but even I don't manage my own properties!

Anyway my point is you can name an area of landlording and I can show you how a professional can run circles around a DIY landlord. I get clients everyday who self managed and beg me to fix what they screwed up because they tried to save a few dollars and ended up paying 2 or 3X's what they would have if they had of just taken the advice of a professional. 

@David Bateman, @Amina Sanders   We handle those areas as well and not to toot our own horn but my team run circles around most PM companies in Atlanta so I would love the opportunity to show you how we are different.

@Irina Belkofer  there are a ton of reasons why a seller would agree to a subject to but they tend to all surround extreme motivation. If you had no choice but to sell would you not agree to that if if met your needs? Of course you would. So think of all the reasons why someone might be motivated and have to sell: Death, job change, divorce, loss of job, etc.  It's not a lose - lose it's a win-win for both parties. 

@Horacio Gutierrez  Yes a buyer can sell or refinance since they own the property. The underlying loan gets paid off just like any other normal transaction.

@David Floyd tough love, not criticism here....Only a fool would own property in their personal name and think insurance is going to cover their risk exposure. There are a thousand situations where insurance will not and cannot cover you so why in the world would someone rely solely on that? 

Like @Costin I. said you need both and depending on your risk tolerance/exposure is when you get more and more elaborate. There are a ton of ways to reduce your costs of maintaining this security barrier like series LLC (assuming your state recognizes them), utilizing lands trusts, limited partnerships, equity stripping, stacking entities, etc.

Asset protection is all about setting up barriers or roadblocks in front of the person coming after you. Nothing is 100% impenetrable but you can set your affairs in such a way that you have so many hurdles for the person suing that they either give up or they are driven to the negotiating table. My personal favorite structure is property owned by a trust; beneficial interest in the trust held by multi and/or single member LLC's; then you can get real creative on who owns the membership in the LLC's. In either case the smart investor always has insurance that covers it all as well.

@Amber Landry Depends on how you define "investor friendly"...you looking to borrow or just a solid banking experience?  State Bank and Trust has been awesome for me and my companies. They just merged with Cadence Banc.

@Jared W Smith Definitely not outside my experience having managed thousands of properties over the last 26 years but I take your point. I value my constitutional rights higher than many and perhaps our views on the role government should play in our individual lives is just different. No big deal; different strokes for different folks. 

I'm not telling anyone to make trouble or stir up something I'm saying he should be aware of what his rights are and just because someone posts a violation notice on your door doesn't mean anything and no in fact the city cannot just fine you where you have no recourse in court. If you don't pay a fine then what happens? Ahhhh, court right? So that's where I was going with that. All this other info you offer about compliance with city codes and alterations to the property is just superfluous information. He never mentioned anything about altering the property or getting building permits. He simply said he got a notice on his door asking for the city to come in and inspect. 

And the burden of proof on an allegation of a crime is on the accuser not on the accused (although watching our news these days one might not believe that's true any longer.)

@Jared W Smith Why would you be worried about "looking suspicious" to the city if they are only there to "protect your safety and welfare"? 

It's not about looking suspicious; it's about liberty, freedom, privacy and property rights. The city can try and fine you for a violation of law but of course they would need to prove that violation in court. The same court they would need to go to in order to obtain a warrant for entry into your property. It's called due process.

If you read his original post; it said he received a violation notice saying "alleged illegal apartment, need to inspect premise"  Therefore they have no evidence of anything illegal they have an allegation. If the apartment is illegal then they should proceed to prove that in a court of law and the owner will have to deal with that. The owner is under no obligation to prove that the property is legal. The burden of proof rests with the city. My point was, he has nothing to gain by allowing entry into his private property and he has lots to lose.