Posted by nick on March 27, 2004 at 09:26:45:
Oops just reread my post and noticed I put that the sandwich lease was illegal. Meant to say legal. Sorry for the mix up.
Nick
Wholesale flipping illegal in MA? - Posted by Al_MA
Posted by Al_MA on March 26, 2004 at 21:49:13:
Hi,
I’m in the Boston, MA area. Met with an attorney to get some
idea on setting up a company and get started in REI. He shot down almost every creative ideas I’ve been reading on this newsgroup. He specifically said contract assignment and double closing are illegal and fraudulant regarding wholesale flipping. He also said I can’t do sandwich L/O since I don’t own the property.
Getting started in REI is scarry enough, didn’t need feedback such as above from an attorney. Should I look for a new attorney or the above is true in Massachusetts? Where can I find good RE Attorney and CPA in the Boston area who will support Creative REI?
Sorry for the long message.
Regards.
Al.
Re: Wholesale flipping illegal in MA? - Posted by Al_MA
Posted by Al_MA on March 29, 2004 at 10:33:58:
Thanks for all the great feedback everyone. I knew I could come back to this message board to get some positive reinforcements to get back on track.
I will definitely look for a new attorney. Probably should phone screen him first before wasting another $150.
Al.
Re: Wholesale flipping illegal in MA? - Posted by MJK
Posted by MJK on March 28, 2004 at 14:23:46:
Hi Al,
Your attorney is feeding you a load of BS! I am in the Boston area also and know many that do flips, sub 2, L/O’s…
I’d suggest you speak with a different attorney. We work with a great one at my office, he’s out of Braintree.
-MJ
Re: Wholesale flipping illegal in MA? - Posted by Frank Chin
Posted by Frank Chin on March 28, 2004 at 05:25:51:
Al:
The RE market in Boston and NYC’s been hot for a few years now. Here in NYC, because it is almost impossible to get properties significantly below market and flip it legitmately, scammers buy them at retail and then sell them WAY ABOVE market using fraudulent appraisals, loan applications to complete the flip.
It reminds me of a situation I was in a few years back.
The authorities around here here had always cracked down on “ticket scalpers” at baseball games. Some years back, my boss had 4 tickets, front row seats, and only two of us were able to go that night. He suggested that we give the other two away at the stadium.
When we got there, we walked up to people mentioning that we have extra tickets, and everyone ran away thinking we were scalpers, even though we told them we didn’t want to get paid for it.
So what happened?? Is giving away free tickets illegal?? LOL. I thought about the episode often, and I concluded that basball fans cannot tell the difference between a scalper and two well meaning schnooks trying to give away a two free front row tickets.
I think its the same for flipping right now in some hot markets. Are you really flipping or are you one of those inflating the sales price to claim its a flip?? So you can see attornies running away, as fast as those baseball fans we ran into at the stadium.
Frank Chin
Re: Wholesale flipping illegal in MA? - Posted by lenn
Posted by lenn on March 27, 2004 at 13:38:03:
Al,
Getting started for some is tough. I agree with the others regarding your Attorney, if they don’t know they say no. In fact they might add… but let me do some research on it (at $200/hr) and I’ll let you know. 
When I first started out in CREI, I, like most, became a student of it. I read every post on CREOnline, every article… and I did the same at at least 4 other CREI websites. I had lot’s of “knowledge” but no practical experience. (that would come later and is a completely different story!)
When I was told by Attorney’s and Mortgage Brokers and others that certain things were illegal, I knew this to be untrue from my studies. BUT… I acted dumb. I (being somewhat agreesive by nature when I feel someone is speaking out of their bunghole) I would politely ask them to point out the specific law, or legislation that support his/her “fact”. Press them on it… and don’t stop until you get an answer. You will find, I guarantee, that not one of these people, even our esteemed attorney friends (love you guys!) will be able to do so! They will be forced to admit that they were indeed spewing mis-truths from their bunghole. It’s actually quite fun.
My best friend is an attorney / judge. HE told me that what I was doing can’t be done legally… I said “oh yeah?” Showed up one night to his office with a bottle of JW blue and a couple of cigars and set about having a discussion about all the aspects of what I was doing so that he could use all the legal resources he had at his disposal to show me the illegalities… ya know what? He is now a “private lender” for me! LOL
So the moral of the story is… keep pluggin.
Do you have an investment group in your area you could join? Many times they have “vender” members (attorneys, cpa’s, LSC’s mortage brokers etc) that are eager to help out new members.
Good luck
Re: Wholesale flipping illegal in MA? - Posted by B.L.Renfrow
Posted by B.L.Renfrow on March 27, 2004 at 12:27:17:
Hmmm, if wholesaleing is illegal in MA, I guess Wal Mart and every other retail store in the state must be violating the law when they buy at a low price and sell at a higher price!
Seriously, there’s an axiom which applies in this case, which says, “The confused mind always says no.” Attorneys and real estate agents do not learn about creative techniques in their training. They learn how to do things the way most retail buyers and regular sellers do them. So unless an attorney is an investor him or herself, it’s unlikely they’ll know a thing about what you’re proposing. But instead of losing face by admitting they don’t know, many of them will respond with, “Oh, no you can’t do that.” After all, if they admitted their lack of knowledge, it’s doubtful you’d be too excited about paying their hourly rate for consultation!
If you have an investor’s club in your area, go there, listen and ask around. It’s likely you can get references there, or perhaps even be introduced to member attorneys who would be glad to get your business. Boston is a big town; there have to be at least a few attorneys there who understand creative REI.
Brian (NY)
Re: Wholesale flipping illegal in MA? - Posted by Dan
Posted by Dan on March 27, 2004 at 10:33:35:
Also, I have been told by my mortgage Broker that buying “subject To” is illegal here in lovely Mass.
FYI
Re: Wholesale flipping illegal in MA? - Posted by Rob FL
Posted by Rob FL on March 27, 2004 at 08:05:46:
Find another attorney. Unless there are some specific statutes in MA they don’t allow this, then these are perfectly legal techniques. The only time where they come under scrutiny is when a retail lender is funding the whole transaction.
I know the standard Realtor contracts that I use specifically ask you to check a box if the contract is assignable or not. Your state probably has similar contracts. Assignability is covered in the Contracts 101 class. Double closings while not preferred because of the extra costs involved are done all of the time. I’ve even done them on HUD-owned properties and had them performed by HUD’s title agent. Even HUD doesn’t care about double closings.
As for sandwich lease options. Builders take and assign options all the time. If you don’t own the property, then you need to be selling your option not selling the property itself. Commercial and occasionally residential tenants assign and sublet leases all the time. A lease option is simply 2 documents instead of just 1.
Ask some other investors which attorney they use.
Re: Wholesale flipping illegal in MA? - Posted by kawikaCA
Posted by kawikaCA on March 26, 2004 at 23:17:43:
Keep in mind that attorney’s specialize. If he’s not a real estate attorney then keep looking. Be careful where you get your advice and who’s opinion you value. There are a lot of people that will never understand what we do and that’s okay, the world needs motivated sellers to. If you really want corporation advice checkout the legal forum and get a hold of William Bronchick’s info on setting up a bullet proof corporation. I’ve setup 3 (high-tech, 501c3, and REI) and there is a lot to know. If this attorney doesn’t understand even remotely what you are trying to do he may do more harm than good. Good luck!
Re: Wholesale flipping illegal in MA? - Posted by Nick
Posted by Nick on March 26, 2004 at 22:13:36:
Wholesaling is not illegal first of all. And second find a different attorney. Find one that works with investors. A sandwich L/O is illegal. This guy is a fool. As long as you have it in your contract that you can, well then you can.
Nick
Re: Wholesale flipping illegal in MA? - Posted by Curt Dalton
Posted by Curt Dalton on March 29, 2004 at 12:35:02:
Who’s that?
Re: Wholesale flipping illegal in MA? - Posted by Frank Chin
Posted by Frank Chin on March 29, 2004 at 07:19:08:
MJK:
Al would be better off finding an attorney who done flips rather than talk one whose never done one into doing it.
I partnered with a real estate guy, tried a flip, and used my attorney, and I can tell it was his first one. Attornies also have a habit of copying contracts and addendums they used before, without much review. Fortunately, me partner had sample contract for a “assignee” rather than as a “seller”, and my attorney was able to do some copying.
My attorney also underestimated the time needed to deal with the seller, plus a “nutcase buyer”, quoted me the rate for a regular closing. He was complaining at the end how much work it was, and I had to throw him a few extra bucks.
I rather have a guy tell me its illegal than to have some guy tell me, "no problem’, and then muck it up.
I would say 99% of the attornies in my area never done flips.
Frank Chin
Re: Wholesale flipping illegal in MA? - Posted by Kristine-CA
Posted by Kristine-CA on March 28, 2004 at 11:46:45:
Gee whiz. Even my attorney, who doesn’t think subject-to is a good idea didn’t say it was illegal. There’s a big difference between illegal and something that has potential risk–he has a thing about the DOS clause and liability. But that’s what attorneys are supposed to do–tell you their assessment of risk within the law.
Do you just ignore your mortgage broker when he says things like that? Kristine