Assignmet of contract - Posted by Greg

Posted by Joe Kaiser on December 12, 2000 at 15:59:06:

You need to have your ducks in a row.


Chapter 27 - Packaging the Deal

Stacking the deck in your favor

I like getting that house ready for showing by taking care of some of the basics right off the bat. So, even before my investor has a chance to take a look, if I?m on top of my game, I?ve completed my ?prehab? to knock off some of the rougher edges and eliminate the obvious problems. Once he sees the place for the first time, if I know my investor, he?ll be interested at my price. But what if he is interested and even better, what if this thing is exactly what he?s looking for? What happens now?

I?ll tell you what, NOTHING . . . if you haven?t completely taken care of business before hand.

Unless you?ve carefully ?packaged? this deal ahead of time, there?s not much that investor can do at this point. Until you?ve completed your homework, no deal can happen. Now, you?re the one that?s holding things up and keeping you from collecting on this thing. Sure, that investor can look and admire and plan all day long, but unless you?ve got all your documentation right there and clearly set out before him and have all the little things squared away, he can?t write you the darn check and that?s pretty much the whole point of the exercise - getting paid!

Remember, in order to get paid, you?ve got to have the deal packaged before anyone takes a look. Of course, this isn?t always the case. If I?ve got an investor I?ve worked with plenty of times before and he knows the routine backwards and forwards, and if it?s a real clean deal where there?s not anything that might hold it up, I just might send him over to take a peek. But if it?s a relatively new investor and the property has a problem or two that must be resolved before the property can be sold, you?d be better off getting things squared away before asking him to stop by and take a look.

You began packaging this deal when you determined it made sense for you to proceed with the purchase. Hopefully, you now have that ?open? title policy right there in the file so your investor can verify for himself that there is in fact just the one loan on the property (if that?s the case) and no other liens.

Also in the file is a copy of the pest inspector?s report, along with a supplemental report confirming any work required was in fact completed. If that work was more than you were interested in undertaking, you also have a bid or two showing pretty closely what it?ll cost to have the pest work completed.

You?ve also got a letter from the lender indicating the current payoff or reinstatement figures (if the house is in foreclosure).

And you?ve got a copy of your insurance policy that you?re ready to assign.

Finally, you?ve got an unrecorded, blank but ?all signed off? deed which will convey ownership to whoever says ?let?s do it? and writes you a check.

He can now take a look at the property and decide on the spot whether or not the deal ?works? for him. He may have to spend an hour or two figuring out what sort of work will be required and what it?ll cost him to get it done. In any case, if he isn?t willing to do the deal within an hour or so, I call someone else.

Now, that?s packaging the deal.

Assignmet of contract - Posted by Greg

Posted by Greg on December 11, 2000 at 19:17:53:

When are you paid for the assignment, at the close of the contract or when you assign the contract?


Re: Assignmet of contract - Posted by Ricky (CenLa)

Posted by Ricky (CenLa) on December 11, 2000 at 21:34:46:

I’ve heard that all contracts have the right of assignment unless otherwise stated. Is this correct?
I have a seller who is buying an owner financed home. Cannot sublet without written consent. Consent not forthcoming. Nowhere in the contract does it address the issue of assignment. Can he assign his contract to me? He has already moved out and is on the verge of letting the home go back to the owner. There is a due on sale clause in the contract.

Thanks in advance.

Depends . . . - Posted by Joe Kaiser

Posted by Joe Kaiser on December 11, 2000 at 19:36:07:

. . . on how good you are.

You want to set it up so you can get a check up front.


Re: Assignmet of contract - Posted by JPiper

Posted by JPiper on December 12, 2000 at 10:06:11:

If your friend has a deed and the prior seller financed him, the deed is not assignable. The deed would need to be transferred by another deed. Read the due on sale clause to see what triggers the clause.

On the other hand, if this is a “contract for deed”, then that’s a different ballgame. Normally a contract is assignable if there is no provision otherwise. However, it should be noted that this assignment does not relieve the responsibility of the current seller. I would add that some states may have a provision prohibiting the assignment of owner-financed instruments unless assignment is specifically permitted in the instrument.

If this is a contract for deed, I would do two things: first, I would read the agreement closely, but particularly the due on sale provision. See what it says. Second, I would contact a real estate attorney and describe the document…ask him if there’s any reason it could not be assigned.


Re: Assignmet of contract - Posted by dewCO

Posted by dewCO on December 11, 2000 at 22:51:45:

I would try it. That’s what Bill bronchick says (one of our on site here “resident” attornies). If it doesn’t specifically say this contract is not assignable then it should be assignable.

They’ll probably be mad and you may need an attorney letter to back you up, but it should work accoridng to Bill B.

Re: Depends . . . - Posted by Greg

Posted by Greg on December 12, 2000 at 07:39:48:

Hey Joe…

By (set up) do you mean, that I tell my investors that I will assign my contract to them for…say 3000 at the time of assignment, not the close date of the contract?

Thanks for your imput.

Re: Depends . . . - Posted by Redline

Posted by Redline on December 12, 2000 at 14:30:04:

It means that if you are experienced and bring a good track record of assigning good “close-able” deals then you can arrange to be paid up front - and other investors won’t have a problem with this.

If you’re just starting out, you may have to wait until close because your investor may not feel comfortable with paying you before he gets paid himself since he may not have 100% confidence in the deal you’re passing him.