I’ve begun disclosing the risks in “subject to” deals in my purchase contract AND in a separate CYA letter at closing.
Subject-to deals are like selling naked put options in the stock market: the odds are in your favor, so the vast majority of the time, it’s gonna work out fine and make money for you. The one time that it doesn’t work, it could be a killer. So don’t take chances with it! Just get them to sign the letter!
I have a “subject to” deal brewing, actually have contract in hand, but will be doing a little renegotiating in the morning. How important is the CYA letter? I have a copy of one from William B at legalwiz.com and from R LeGrand.
Re: Subject to Deal?? CYA Letter?? - Posted by Dee-Texas
Posted by Dee-Texas on August 02, 2001 at 17:44:04:
I always have a Power of Attorney signed AND CYA letter. I stress and stress again, that the loan will stay in their name until I can find a buyer. BECAUSE I am taking their place with a house that hasn’t sold…They couldn’t find a buyer… now I am taking their problem and making it mine. I just have more time than they do…They always thank me, because that’s what I am doing. Taking a house that hasn’t sold and solving a problem for them making it a win-win for both of us.
Get Both signed…because sometimes you can’t find the sellers and need their signature. The Power of Attorney gives you the right to sign for them.
Best Success,
Dee-Texas
Re: Subject to Deal?? CYA Letter?? - Posted by Becky IL
Posted by Becky IL on August 02, 2001 at 24:15:11:
I remember the first time I asked a seller to sign the CYA letter. I sat there at the table and I was trying not to look nervous and I was waiting for their reaction. I had already explained that the loan would stay in their name, but there’s nothing like seeing it in black and white, and so BOLDLY stated. Well, they signed it. They didn’t like it, but the bottom line was they needed to sell the house and I was sitting at their table ready to close.
I know it’s uncomfortable, but you must do this for your own protection. And I have never yet had a CYA letter “kill” a deal. Remember that the reason why you are even sitting in their kitchen or living room is because they believe that they have exhausted their other options and YOU are their last chance to solve their problem.