Posted by JohnBoy on January 19, 2001 at 10:47:02:
Well, wouldn’t that just mean you would have liability on nothing? LOL
I mean, if the liability is limited to the earnest money and there isn’t any earnest money, then wouldn’t that mean you would have 0 liability? LOL
Or would that be considered trying to fraud the seller in some way?
Subject-to for $20.00 - Posted by LeonNC
Posted by LeonNC on January 18, 2001 at 17:56:29:
I got a nice house under contract today for the loan balance with a $20.00 earnest money depost. Talk about a no money down deal. I’m stoked! That makes three for the month. The other two need a lot of repairs but the cashflow will be good on both. I believe I’ll slow down the marketing as I’ve got my hands full for the next FEW months. Thank-you everyone here at CREonline for all your help this is a dream come true! So far…lol. Lots of work but worth it.
LeonNC
Never ever, ever… - Posted by David Alexander
Posted by David Alexander on January 19, 2001 at 24:20:46:
Stop the buying machine… You can always flip or partner on the deals you cant handle.
But it takes forever to get the machine cranked back up.
I once had six houses for sale way back when and had payments going out no income coming in and decided to stop the buying machine because I needed to get those houses sold. Mistake, I should have bought another house, two, three, four to pay for the outgo.
It takes to long to start again, tweak your systems, partner or flip deals.
My thoughts anyway.
David Alexander
P.S. Quit putting down the 20 bucks as earnest money, you could use that for lunch. Put a dollar in the blank for earnest money and make a big joke about it, how it’s just to make the contract legal and binding…You say to them…" you do want to sell dont you?" You do want me to buy dont you?"
If they are going to get out of the contract whether it’s a dollar or 20 it will be immaterial.
Re: Subject-to for $20.00 - Posted by JPiper
Posted by JPiper on January 18, 2001 at 19:34:26:
Why slow down the marketing? You slow down your marketing, the next thing you know your current deals are done…and you’ve got nothing to do. Now you have to crank your marketing up. Why not just keep marketing. Amazing how much busy people can get done.
Congrats on the deal by the way.
JPiper
Re: Never ever, ever… - Posted by Jim IL
Posted by Jim IL on January 19, 2001 at 03:20:51:
David,
Why even put up the dollar?
I never do.
Have fun in Atlanta,
Jim IL
If you say so - Posted by LeonNC
Posted by LeonNC on January 18, 2001 at 19:54:07:
I just happen to have a bunch of signs I paid for, I guess I could get’em out. Hey, I’m all ears and if you say to crank up the marketing that’s what I’ll do. Thanks for all your help Jim.
LeonNC
Consideration… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on January 19, 2001 at 08:29:33:
Hi Jim,
I assume you’re serious and not just ribbing Dave (admittedly a fun pasttime!LOL). A contract requres “consideration”, which in layman’s terms means a thing of value other than a promise. $1 constitutes consideration…and is well spent considering the alternative.
John Hyre
Re: Consideration… - Posted by PJ
Posted by PJ on April 15, 2002 at 22:28:23:
Consideration is the house.
Re: Consideration… - Posted by PJ
Posted by PJ on March 30, 2002 at 22:28:47:
Consideration is the house. Correct?
PJ
Re: Consideration… - Posted by Rob FL
Posted by Rob FL on January 19, 2001 at 11:11:54:
After consulting with my attorney, I stopped putting zero or $1 as an earnest money deposit.
I now use $100 deposits, but hold them in my realty company’s (company I own) escrow account. The reason being is that I use a liquidated damages clause in my contract in lieu of specific performance or actual damages. This clause is a “must” for me because if for some crazy reason I end up defaulting I don’t want them to sue me for actual damages which could potentially be thousands of dollars. Instead I want to only be liable for the $100 earnest money deposit.
My attorney said that if the earnest money deposit is zero or $1, then almost definitely a judge would say the liquidated damages clause is “unconscionable” because the buyer has no punishment if he defaults.
Just my .02 on this subject.
Re: Consideration… - Posted by JohnBoy
Posted by JohnBoy on January 19, 2001 at 09:30:29:
Taking over and making the payments is something of value. Also, bringing any back payments current would be something of value. A mutual agreement between buyer and seller is something of value where the consideration on the buyers behalf is to perform on something within the contract. Agreeing to take over someone’s mortgage payments subject to would be a form of consideration.
John Beck addresses this issue in an article he wrote pertaining to earnest deposits.
Here’s a part he addresses about consideration:
However, is a “deposit” necessary to create a binding real estate purchase/sell contract?
The California definition of “consideration” using the language of “any benefit conferred, or agreed to be conferred” and “or any prejudice suffered, or agreed to be suffered.” Basically, whenever a buyer makes an offer to purchase real property at a certain price and in accordance with certain terms and conditions, upon acceptance, that buyer is providing to the seller a “benefit … agreed to be conferred” by the buyer upon the seller.
The “benefit” is the commitment of the buyer to purchase the seller’s property at the agreed upon price, terms and conditions.
Additionally, whenever a buyer makes an offer to purchase real property at a certain price and in accordance with certain terms and conditions, upon acceptance, that buyer has agreed to “suffer” a “prejudice.”
The “prejudice” is the obligation to purchase the seller’s property at the agreed upon price, terms and conditions.
You can find the article at this link:
Re: Consideration… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on January 19, 2001 at 12:20:58:
Good point…the $1 gets you by the consideration issue and $100 gets you past the damgages issue.
Re: I agree - Posted by Stacy (AZ)
Posted by Stacy (AZ) on January 19, 2001 at 11:28:25:
I know consideration, theoretically, does not need to be “dollars”. But why risk ending up in court trying to convince a judge that $0 or $1 is a valid amount for liquidated damages? Just because you are legally correct, in your mind, doesn’t mean the judge will agree. Why push it? It’s silly. If you can’t afford $100 to seal a contract, you need to get a job.
Stacy
For a mere dollar… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on January 19, 2001 at 09:59:17:
you avoid the whole issue. The buyer does receive a benefit and you do suffer a detriment- your PROMISE to pay. This is not a tangible thing and under traditional contract law, isn’t consideration. Many states, by statute (i.e.- CA) or common law have altered the meaning or relevance of consideration…but why open yourself up for this admittedly obscure argument? Pay the dollar.
John Hyre
Re: For a mere dollar… - Posted by JohnBoy
Posted by JohnBoy on January 19, 2001 at 10:09:48:
I agree. You never know what you end up with for Judge these days should this ever become a issue. I’ve also heard talk that even $1 can cause problems and more people have gone to using $10 now.
Re: For a mere dollar… - Posted by JPiper
Posted by JPiper on January 19, 2001 at 10:29:11:
Another interesting point…if you wanted to have a clause in your contract that limited your liability under the contract to the earnest money, then how would you do it if you had no earnest money up?
JPiper