Attorney and Attny Gen about Subject-2 complaint - Posted by DavidGOR

Real Estate Investing Real Estate Law
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Posted by DavidGOR on April 07, 2006 at 20:10:05:

John,

This is philosophical - mostly…

Thanks for your input. Yes, you can count me stupid.
I know justice isn’t always just but can be downright dirty.
I’m not the smartest when it comes to knowing the law
but I’m old enough to know what’s “right” and young
enought to take risks and learn from them. This life
is too short to not go up against seemingly undefeatable
ugly dirty unscrupulous uncircumsized giants.
But I’ve analyzed and weighed the risks, and rewards - mostly.

What’s the worst that can happen? Fine me $50,000?
Not allow me to do business in this state?
Take my other 5 properties? Prison? Am I ready for that? Maybe not. Does it matter? In so many words,
yes and no. Foolish thinking? I don’t think so, most
others would say “big time fool”. I’ve learned to
not take on other peoples’ fears, with discernment of course.

With that said, I’m not just going to lay it all out
for them to take.

But I know that it was all legal and good. (Yes I know that the prisons are full of ‘good’ people.)

(And with all that said, I will be contacting an attorney).

Any comments to the “commingling” issue?

-DavidGOR

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Attorney and Attny Gen about Subject-2 complaint - Posted by DavidGOR

Posted by DavidGOR on April 07, 2006 at 19:15:21:

2 months ago, out of the blue, a seller has recently hired an attorney and
contacted the Attorney general about my practices of
buying a house Sub-2. I bought it THREE years ago.
(The seller was saying that they couldn’t get financed
for another house. The seller didn’t even bother to
contact me about how to show the mortgage was being paid.)

Out of the blue I got a letter from the attorney and the
Attorney General. The attorney threatened to sue if not remedied.
The AG wanted my side of story (rebuttal to complaint).

Of course the seller signed a POA and Sellers Mortgage
Disclosure. The Disclosure says …I’m buying Subject-To
the existing loan… and …the loan will stay in their
name until it is paid off or assumed by a future buyer.

I replied to the attorney and AG with impeccable logic
explaining all the past, present, and future benefits the
seller obtained and will obtain (5 pages).

I decided I didn’t want to roll in the mud with a dirty
attorney (I’d get dirty and he has the fun) so the house
was refinanced.

I didn’t hear from them until recently.

The Attorney General asks me for response to a rebuttal
that the attorney wrote the the AG.

Among other things, the attorney wrote:

“…I think the Attorney General is missing the “Big Picture”
aspect of this investment scheme.”

“…stripping the seller of equity” (I explained how
there was zero equity in the previous letter)

“This type of transaction placed the trustee in a position
to handle buyers assets for his own business advantage”
(The attorney was ignorant about transfer of beneficial
interest. I didn’t bring it up in my first rebuttal.)

“A trustee of a trust owes the beneficiary of the trust
the duty to act in the beneficiary’s best interests,
to avoid self-dealing, and prohibits the commingling
of trust funds with those of the trustee’s assets.”
(Again, ignorant attorney)

“I have complained to the Attorney General in the past
about this scheme, which, in its present form, most
certainly acts to deceive the lenders of this State and
take advanage of an economically vulnerable population.”

My only question: Does the attorney have anything on me
for “commingling of trust funds”? I personally was the
trustee and my LLC had 100% beneficial interest.

Also, is there anyone who has written (and would share)
to an attorney and/or Attorney General showing how a Subject-To is beneficial to all parties?

-David G.

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Attorney and Attny Gen about Subject-2 complaint - Posted by colvegas

Posted by colvegas on April 09, 2006 at 17:52:07:

Just wished to comment and no legal advise here of course but as to your trust since the seller did not retain min 10% beneficial interest it can be deemed a dry or abusive trust by the IRS or local laws if a charging order or judgment comes against it…??
Another point is that under the Garn st Germain Act of 1982 if the borrower or person on the deed is not a beneficiary in the trust that could invoke the lenders due on sale trigger or accelerating the loan thus jeopardizing the underlying financing on the note…??
Does the seller has any interest in this trust…??
If you are the trustee there is a collusion or bias since you are acting in your OWN best behalf this is called a degree of merger and that means the trustee and beneficiary are the same natural person.
David Iam an investor like you but attorneys whom do not understand trusts or a sub2 can make it look like you did take advantage of the seller even though that was not your intent…
David sorry if I hit you with this stuff and getting with an attorney who can sort through and respresent you on this since is way after the fact…
I hope you do not take this the wrong way…
Sub2 can be beneficial to all parties as long as it is structured correctly and that it uis done legally,ethically and safely…
Just my take and good luck hope it works out for you…
If you like to call me I find this stuff interesting my number is 702-400-7632

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Not a DYI project - Posted by John Merchant

Posted by John Merchant on April 07, 2006 at 19:38:53:

Wow! Do you also attempt to do your own brain surgery ?

Doesn’t it occur to you that this could be BIG legal trouble and your own lawyer is now needed, badly?