Posted by Marty Weisberg on October 01, 2000 at 08:59:22:
JohnBoy,
Thanks Johnboy. Another great idea.
Marty
Still not been answered! - Posted by BH AZ
Posted by BH AZ on September 28, 2000 at 01:11:22:
I joined this site because I thought that you could get help. I am new to this and I only had one little question, but no one will answer me here nor will they even talk to me in the chat room! All I wanted to know was could you sign up a deal with THE BANK itself on a porperty that they have and then flip the contract to another investor? Whoever answers this question will be a savior to me. I am only trying to get started here too!
Re: Still not been answered! - Posted by Eric C
Posted by Eric C on September 28, 2000 at 11:10:06:
Hi -
All these folks are correct. The answer as Vic said is, it depends.
In my experience, what matters most to the bank is WHO you are.
All banks do assignments – even those who swear they never do. The fact is that they WILL do them for SOME people and under SOME circumstances.
Your goal should be to become one of those people that banks like to cultivate and for whom they will demonstrate flexibility. Even better, become credible enough that they will change their policies to accomodate you.
This happens everyday. But it won’t happen for you unless you establish credibility with the bank (or you manage to find a really motivated banker – which could be scary for both of you).
Good luck,
Eric C
PS - for the skeptical, I just closed a deal with a local bank that “had never allowed assignments”. They not only “allowed” me to do so, but they then turned around and purchased an note and assignment FROM me (concerning a contractor client of theirs). Again, it does happen.
Re: Still not been answered! - Posted by Marty Weisberg
Posted by Marty Weisberg on September 28, 2000 at 09:01:02:
The answer to the question is yes. Sometimes however the bank will not allow you make your contract assignable. In those cases you can put a clause in an addendum saying " Buyer reserves the right to take title to this ppoerty in any name he chooses". this has always worked for me.
Marty
Re: Still not been answered! - Posted by Bill Scott
Posted by Bill Scott on September 28, 2000 at 07:05:39:
The answer depends on whether the bank allows assignments or not. Most banks have a multi-page addendum that has all sorts of prohibitions in it. If the bank allows assignments, then assign it. If the bank doesn’t allow assignments, then find a buyer and sign a purchase contract with them. Then, find a title company that will do simultaneous (or double) closings. You close with the bank and then close with your seller.
It Depends! - Posted by Vic
Posted by Vic on September 28, 2000 at 03:19:12:
Whether you can assign a contract or not from a bank depends on the bank. Most have a special addendum that you need to sign. Read that addendum & see what it says about assigning. Many don’t allow assignments.
Vic
How does this help? - Posted by Vic
Posted by Vic on September 28, 2000 at 14:33:35:
Marty,
Hi! How would using your clause help you to assign the contract? I’m a little confused here. If the bank finds out that it was indeed someone else & not you that actually took title, couldn’t that potentially cause a problem?
I’m sure most banks wouldn’t care as long as it was sold, but still all kinds of things can come up that can cause problems.
Vic
Re: Still not been answered! - Posted by David Alexander
Posted by David Alexander on September 28, 2000 at 10:10:12:
I like that Marty… Same animal different differnet words… thinking around the box.
David Alexander
Re: How does this help? - Posted by Marty Weisberg
Posted by Marty Weisberg on September 28, 2000 at 15:51:47:
Vic,
I don’t see where that creates any problem. The contract says that you can take title in any name that you chose and that is what you are doing. If they have a problem with it, they won’t accept the original contract.
Marty
Re: How does this help? - Posted by Vic
Posted by Vic on September 28, 2000 at 23:10:02:
Marty,
I’m still not understanding you. That clause says you can take title in any name. What is the point of the clause? Is it to allow you to take title in an LLC or to somehow assign your rights?
Thanks,
Vic
Re: How does this help? - Posted by Marty Weisberg
Posted by Marty Weisberg on September 29, 2000 at 05:33:27:
Vic,
The point is just that. To allow me to take title in any name that I chose. I can take title in my name, my friends name, my neighbors name, an investors name, my LLC, my corporation…etc. Anyone that wants to buy the porperty. I am not doing anything underhanded, illegal or shady. If they don’t like that fact then they don’t approve the contract with the addendum. It is just a matter of getting the same thing accomplished as an assignment by going outside of the box.
Marty
Re: Hmmm. I don’t know… - Posted by Stacy (AZ)
Posted by Stacy (AZ) on September 29, 2000 at 17:22:37:
Marty, interesting concept. But when your contract states, “Buyer reserves the right to take title to this property in any name he chooses”, I’m not understanding how this is stating that SOME OTHER party can take title to the property instead of “Buyer”. If someone else is taking title (your assignee), then “Buyer” is NOT taking title at all, in any name. This seems oxymoronic to me. Your clause is saying two things: 1) I (buyer) will take title, 2) the name under which I (buyer) take title can be any I choose. But, if you assign to someone else, you have violated number 1.
You said, “I can take title in my name, my friends name, my neighbors name, an investors name…” But you (“buyer” in the contract) are not taking title at all if an investor’s name is put on the deed.
I can see why institutions think you mean you can take title as a corp, a beneficiary of a trust, as Mr. M. Lastname, Marty Lastname, etc. But I’m sure they aren’t interpreting this to mean someone else can take title after you assign it. It would probably never get as far as court, but my guess is this clause could be viewed as misleading or deceptive, if your intent is to assign the contract.
Just my take.
Stacy
Re: Hmmm. I don’t know… - Posted by Vic
Posted by Vic on October 01, 2000 at 24:09:27:
Stacy,
I’m with you. I still don’t see how this clause allows someone else to take title & not original buyer. Seems like you could be opening a can of worms with this one.
Vic
Re: Hmmm. I don’t know… - Posted by Marty Weisberg
Posted by Marty Weisberg on September 30, 2000 at 06:41:28:
Stacy,
You are a most definitely right. The statement is very ambiguous and is meant too be. If the bank/seller wants for only me to buy the property, the will NOT allow me to pu that in the addendum. But many times they have a policy of not letting a purchase contract be assignable. But on the two or three occasions when I have had to add this clause to my addendum, they have not had a problem with it. On one occasion when asked by the selling banks realtor (who said they probably wouldn’t go for it)I just told her that I represent several investors and I was not sure who would ultimately take title.
The other side of the coin and probably more important is that I fully intended on making this purchase. Whether it was me closing or someone else. I wasn’t using this clause to be able to walk from the deal. If I didn’t have someone to buy it I was more than happy to buy it.
I am not trying to be deceitful but trying to leave my options open. I would guess that if I ever used this clause with a bank and “the entity/person” who was supposed to take title didn’t, that would probaly be the last deal I did with that bank.
Marty
Re: Hmmm. I don’t know… - Posted by JohnBoy
Posted by JohnBoy on October 01, 2000 at 01:23:46:
Another way to handle this would be to enter into the purchase agreement using an LLC or possibly a land trust. You would sign the purchase agreement as president of xyz, LLC. Then instead of trying to assign the deal you just sell your LLC to the buyer which would include any pending contracts the LLC has entered into. This way no person is personally agreeing to take title, the entity is. Then it doesn’t matter who owns the entity at the time of closing since the same entity is actually closing on the deal.
Some states have higher costs involved with setting up an LLC, but if you didn’t want to pay to set one up to have ready ahead of time, you might consider doing this in a land trust where you sell your beneficial interest in the trust to your buyer which then gives him/her the right to close on the property under the trust.
I think it was Steve Cook that mentioned this on using LLC’s for this. I think he said he keeps a few on hand at all times so he has the entity already in place to enter into a purchase agreement. If I remember correctly, I think he said it was only around $60 in his state to form an LLC.
I thought it was a great idea for flipping properties when dealing through banks!